Is Uber really worth over $62 billion? Is Slack worth $4 billion?
The million dollar question (pun intended) occupying every entrepreneur who founds a startup is how much their company is worth. This is a complicated subject that affects not only meetings with investors and chances of investment, but also how much is raised, the company’s likelihood for success, and how much money the entrepreneur will wind up with in the event of an exit or merger.
A new service called Equidam, which a Dutch startup developed, aims to answer this question using algorithms and an automated process for early stage startups.
An initial valuation in 10 minutes
To obtain a rough initial valuation, the user must answer a number of rather basic questions, such as how many founders there are, how many employees the company has in addition to the founders, how many years of relevant experience each manager has, whether all the employees and managers work part-time or full-time, the year of the company’s founding, and whether the company owns intellectual property. As noted, the answers to these questions will give you a rough valuation, but filling in additional details will produce a more accurate valuation. Equidam’s full report includes an analysis and a three-year forecast, as well as almost 100 different parameters.
The engine of this service uses five different methods for evaluating startups: the checklist method, which weighs assets such as the company’s staff, intellectual property, and business model; the scorecard method, which includes a comparison of your startup with other startups in the initial stages in your field of business and geographic area; the venture capital fund method (also known as the classic method), which tries to estimate what the company will be worth in three years’ time, and takes the risk level into account; the DCF with multiples method, which measures a future profit multiple and risk level; and the DCF with long-term growth method, which takes into account the company’s growth in relation to the prevailing growth rate in the sector in which it operates.
Over 10,000 startups from 78 countries have used the service since it was launched. The basic service, which will be sufficient for most users, will give you a valuation and company profile free of charge. If you want, you can register for the company’s premium service, which will provide a number of additional advantages: benchmarking, to see how you measure up against similar companies; more advanced financial insights; the option of printing the reports (and not just seeing them on the screen); unlimited storage; and 24/7 support.