DCF Analysis with Start-up Valuation Software
There are several options when it comes to valuing your company, and discounted cash flow (DCF) is probably the most common one. The DCF method establishes your company’s value by its projected future cash flows. It is common practice to employ this strategy while assessing possible investment possibilities.
Despite its prevalence, the DCF method of valuation has limitations due to its reliance on projected future cash flows, which can be difficult to predict. While discounted cash flow (DCF) analysis is still the gold standard in the financial sector, some analysts find the process overly complex.
But what if there is an easy way out? Yes, you can perform DCF analysis using startup valuation software for accuracy. Eqvista’s startup valuation software makes the valuation process seamless and less time-consuming in this case.
In today’s post, we’ll show you the benefits of using valuation software for DCF analysis once you know how to assemble the model and understand its different parts.

What is DCF valuation?
A fundamental tenet of personal finance is that ten dollars now is more valuable than ten dollars tomorrow. This idea represents the “time value of money” theory, which is the basis for DCF research. You can assess an investment’s worth by looking at its discounted cash flow (DCF), a technique that uses future cash flows to determine its value. The DCF method uses future cash flow estimates to determine an investment’s value.
When you find a company’s value using the DCF method, it’s easy to tell if it’s still undervalued or overpriced. For example, to find an undervalued firm that can yield positive returns, one must calculate its discounted cash flow and see if the numbers come out higher than its present market value.
What are the features to look for in Business valuation software for DCF Analysis?

As previously mentioned, the DCF method can be a bit complex, but robust software is always handy. There are a few technical aspects to consider when performing the DCF method using startup valuation software. Let’s look at them one by one here.
- Automated calculations – You should try to find a program that can automatically calculate the DCF method’s numbers. It should also be able to calculate final prices and discount future cash flows quickly. When you do such complex calculations manually, you might make mistakes, but this feature saves you time and makes errors less likely.
- Data integration – The software should easily connect to different data sources, like spreadsheets and financial software. With this interface, you can rest assured that the valuation process will easily access all the necessary financial data, including sales statistics, costs, and growth estimates.
- Flexibility and Adaptability – If you want to tailor the program to the specifics of the company you value, look for features that let you adjust assumptions. One example is the flexibility to adjust variables like growth and discount rates to represent real-world situations better.
- Future growth considerations -The software should make it easy to analyze potential future growth opportunities. It should also allow you to assess industry predictions, market trends, and revenue estimates to gain an understanding of the possible course of the company being evaluated.
- Sensitivity analysis – Having a strong sensitivity analysis feature is important because it allows us to understand how changes in key assumptions can affect the overall valuation. With this functionality, users can easily explore different scenarios by tweaking variables and seeing how changes impact the valuation outcome. This helps users make well-informed decisions.
How do you do DCF analysis with valuation software?
Valuation software is a powerful tool that can significantly simplify and expedite the process of conducting a discounted cash flow (DCF) analysis for startup valuations. By leveraging this software, you can take control of your analysis in a user-friendly and efficient manner.
Inputting Assumptions
- The software typically provides user-friendly interfaces to input key assumptions like revenue growth rates, operating costs, capital expenses, and capital requirements over the projection period.
- You can define multiple scenarios with different assumption sets to analyze various growth trajectories and strategies.
Projecting Cash Flows
- Based on the inputs, the software automatically calculates projected cash flows for each future period, including free cash flows to the firm (FCFF).
- Software eliminates the manual calculations and reduces the risks of errors.
Determining Discount Rate
- Many valuation software tools have built-in models or guidelines for estimating an appropriate discount rate based on a startup’s stage, industry, and risk profile.
- You can manually input a discount rate based on your calculations or investor expectations.
Calculating Terminal Value
The software applies standard formulas to calculate the terminal value, representing the startup’s value beyond the explicit forecast period, assuming a stable growth rate.
Discounting and Valuation
- With projected cash flows, discount rate, and terminal value, the software discounts the future cash flows to their present values and sums them up to arrive at the enterprise value.
- It then adjusts for the startup’s net debt or cash position to calculate the equity value, representing the value of the company’s equity.
Sensitivity Analysis
- Many valuation tools offer sensitivity analysis features, allowing you to test the impact of changes in key assumptions (e.g., growth rates, discount rates) on the valuation output.
- This helps identify the critical drivers of value and assess the range of potential valuations under different scenarios.
Reporting and Visualization
- The software typically generates comprehensive reports summarizing the valuation analysis, including charts and graphs to visualize better and communicate results.
- This can aid in presenting the valuation to investors or stakeholders clearly and compellingly.
What are the benefits of using Eqvista’s Startup valuation software for DCF Analysis?
Eqvista’s startup valuation software provides several features and capabilities to streamline and enhance the Discounted Cash Flow (DCF) analysis process for startup valuations:
Intuitive Interface for Inputting Assumptions
- The software offers user-friendly interfaces for entering key assumptions, such as revenue growth rates, operating costs, capital expenses, and depreciation & amortization expense needs over the projection period.
- This allows for easy entry and manipulation of the underlying data driving the DCF calculations.
Automated Cash Flow Projections
- Based on the inputted assumptions, Eqvista’s software automatically projects future cash flows, including free cash flows to the firm (FCFF), eliminating the need for manual calculations.
- This saves time and minimizes the errors in the valuation process.
Customizable Discount Rate Calculation
- The software provides guidance and models to estimate an appropriate discount rate based on the startup’s stage, industry, and risk profile.
- Users can manually input a discount rate based on their calculations or investor expectations.
Terminal Value Computation
- Eqvista’s valuation software applies standard formulas to calculate the terminal value, representing the startup’s value beyond the explicit forecast period, assuming a stable growth rate.
Discounting and Valuation Output
- With the projected cash flows and discount rate, the software discounts the future cash flows to their present values.
And sums them up together with the Terminal Value to arrive at the enterprise value.
Scenario Analysis and Sensitivity Testing
- The software offers scenario analysis capabilities, allowing users to define and analyze multiple scenarios with different assumption sets.
- It also provides sensitivity analysis features to test the impact of changes in key assumptions (e.g., growth rates, discount rates) on the valuation output.
Reporting and Visualization
- Eqvista’s valuation software generates comprehensive reports summarizing the DCF analysis, including charts and graphs, to visualize better and communicate results.
By leveraging Eqvista’s startup valuation software, users can streamline the DCF analysis process, ensure consistency and accuracy in calculations, and gain valuable insights through scenario analysis and sensitivity testing.
However, to enhance the reliability of startup valuations using the DCF method, it’s crucial to ensure the quality of input assumptions and understand the underlying methodologies and limitations of the software.
Use Eqvista’s Startup Valuation Software for Accurate Valuation Reports!
Determining the monetary worth of a corporation’s entire business or division could be challenging. Firm valuation estimates a firm’s monetary worth for various reasons, such as determining its sale price, partnership owners, tax liabilities, and even divorce cases.
Don’t worry if you’re having trouble getting your business valued. We have a team of experts ready to assist you. Not just that, Eqvista’s startup valuation software offers real-time data and models to predict your startup’s worth in a matter of hours. You also get accurate valuation reports with supporting data. Want more information on our services? Feel free to reach out to us for a free consultation.