If you’re an entrepreneur or founder of a startup, you’ll probably want to know the worth of your company. Typically, the startup valuation is based on its future expectations and projections, which are sometimes difficult to quantify. In recent years, with technological advancements, sophisticated tools have been available that simplify the process of calculating the value of a startup. This article provides detailed insight into the startup valuation calculator, which is a simple-to-use tool that comes in handy for startups to calculate their prospective valuation.
Startups and valuation calculator
A startup in its early phases generally has little or no revenue, which creates a highly volatile and unpredictable startup valuation. In this situation, manually calculating the value of a startup using traditional methods is even more difficult and time-consuming. In this dynamic business environment, why would you still want to calculate valuation manually? This is where a startup valuation calculator comes in to simplify and makes the valuation process much easier.
This calculator is an automated way of calculating startup valuation quickly without having to rely on complex mathematical models. The startup valuation calculator uses proprietary algorithms to consider valuable factors, including projections, risk factors, and other important variables, to arrive at a valuation for the startup.
Understand startup valuation
The startup valuation basically means to ascertain the financial value of a startup in terms of company equity, debt, and other financial instruments. This essentially helps in calculating the worth of the company, which will, in turn, derive a rough estimation of the worth of the startup at a particular point in time. It can be achieved through an objective, quantitative method by calculating the value of a startup by considering certain very important variables for startups.
As a result, startup valuation is one of the key metrics that startups use to measure and gauge their future prospects. However, there is no one perfect way of calculating the valuation of a startup. There are a number of methods that can be used to calculate the valuation, and every method has its own set of advantages and disadvantages. As such, a startup valuation calculator can be the best alternative.
Why should founders value their startups?
The competitive nature of the business world has a number of reasons for a founder to value their startup based on the size, growth and profitability of the company. It helps in finding out how well the company is performing and whether it’s doing better than expected or not. Here are a few reasons why you should value your startup:
- The startup valuation helps in making the most pertinent decisions, which will ultimately land you on the right path for your business. Whether it is strategizing, planning, expansion, or even financial considerations, you’ll want to value your startup to cover all the bases. As a result, you’ll be able to make optimum business decisions, which is beneficial for the company in the long run.
- You’ll always want to calculate your company’s financial health, to understand where it stands and how fast or slow it’s growing. This can be done by calculating the startup valuation in different stages of their growth. As such, you’ll be able to know whether you’re doing well or not and what needs to be done in order to boost your performance as a whole.
- In order to secure funding from investors, you’ll need to present them with a convincing case in order to get the deal sealed. The startup valuation will be a key to convincing them regarding the financial viability of your company and its prospects for future growth. Thus, you’ll be in a better position to generate investor interest, which will ultimately help you to secure the amount of funding you want. But how to calculate startup valuation?
Common methods to use for startup valuation
Whether you want to calculate the value of your startup manually or you’ll want to use a startup valuation calculator, understanding the various methods to use for startup valuation is essential. The following are the 4 most common methods to value startups:
- The Berkus method – This methodology is designed by Dave Berkus and is inspired by five factors that help to determine the value of a startup. It includes product prototypes, sound ideas, strategic relationships, quality of the management team, and initial sales. The method is based on these factors, and each one is evaluated for a startup in order to arrive at its worth. However, it has a high degree of uncertainty, yet a rough estimate of the value of a startup can be achieved by using this method.
- The Scorecard valuation method – This method is largely based on the number of different variable factors that are included in a calculation. These variables are often linked to different aspects of a company, including the calibre of the team, the size and scope of the market, product development, money, and a few other variables. Each of these variables is weighted according to their degree of importance and then summed up to calculate the score. This method is quick and easy to use.
- The Risk factor summation method – This method helps in quantifying the risk factors based on which an estimated value of a startup is arrived at. These include threats from competitors, legal issues, vulnerabilities from technology, finances, management, risks of funding, and market risk. The risk factors are then summed up as per the severity and magnitude of the risk factors. While it is crucial to note that the volatility of the results can be vulnerable and is dependent on the inputs.
- The Venture capital method – This is the most commonly used method by professionals and analysts in need of a quick, objective, and precise estimation of the value of startups. When a startup reaches maturity, this method estimates its exit or terminal value. The price at which the company can be purchased or sold is referred to as the exit value. It is a reliable approximation based on the potential of a startup to produce future returns. However, it is essential to note that the exit values should be calculated with caution.
What is Eqvista’s startup valuation calculator?
Eqvista’s startup valuation calculator is a tool that helps you calculate the valuation of a startup within a matter of minutes. Based on 5 key factors such as team/management, business, product, market, sales and marketing, there are 30 multiple-choice questions that get you an accurate and precise startup valuation. The tool is simple, quick, and easy to use–without a doubt, the ideal tool for determining the value of your startup.
How can founders get benefits from Eqvista’s valuation calculator?
We believe that calculating the value of startups using traditional methods is not enough due to the fact the factors that go into valuing startups greatly vary. In order to cover all the aspects of your company, we have developed a unique and adaptive algorithm that evaluates around 30 variables based on a set of 5 key factors. This helps you gather more insights while providing an accurate and fair valuation within minutes. As a result, Eqvista’s startup valuation calculator is built as a flexible, dynamic, and intelligent valuation calculator to make it easy for founders.
Benefits of calculating startup valuation with Eqvista’s calculator
Now that you know what Eqvista’s startup valuation calculator is, you probably want to know why you should use it. Let us take a look at some of the benefits that you can get from using Eqvista’s valuation calculator:
- Raise funding – Are you planning to raise funding for your startup? If yes, then you will need to have a valid startup valuation. Don’t worry; our tool comes in handy here. You don’t have to rely on your own financial projections, nor do you need to spend hours calculating your company’s value. With Eqvista’s startup valuation calculator, you can calculate the valuation of your startup in minutes.
- Understand and calculate the market value – If you want to understand your startup’s value in relation to the market, then it is important that you calculate the startup valuation. The best way to understand the market value is through an objective and reliable source. This can be achieved through Eqvista’s startup valuation calculator, which calculates the market value of your startup in a timely manner.
- Grant equity – You will probably want to give equity to your employees as an equity compensation plan. For this, you need to understand the current valuation of your company. With Eqvista’s startup valuation calculator, calculating the value of your company is made simple and easy. After you calculate the value of your startup, you can properly strategize and plan your equity compensation plan.
- Transfer of shares – The best way to transfer shares is to have a proper understanding of the value and worth of your startup. With Eqvista’s startup valuation calculator, you will easily calculate the value of your company and then determine which percentage of ownership to transfer based on its value. In addition to this, it helps you avoid issues of misleading and highly inflated valuations.
- M&A – In the process of mergers and acquisitions, it is very important that you determine the accurate value of your startup for the purpose of this deal. In order to do this accurately, you will need to have a concrete startup valuation. Eqvista’s startup valuation calculator will help you do the valuation for you in no time and determine the value for the purpose of M&A.
Why should you choose Eqvista’s startup valuation calculator?
Here are a few features of Eqvista’s startup valuation calculator that makes it the best option for you:
- Proven and reliable methodologies – Eqvista’s startup valuation calculator is backed by the latest methodologies and credible research. The company uses a proven and reliable formula which ensures that the startup valuation is accurate, fair and precise.
- 100% accurate valuation report – There are several factors that affect the valuation, and these factors can be subjective. With Eqvista’s valuation calculator, finding the true value of your startup is no longer a challenge. We assure you that the valuation you obtain from this startup valuation calculator is 100% accurate.
- Get valuation done within 20 minutes – Don’t waste your time with old-fashioned, slow and inefficient ways of calculating a startup valuation. With Eqvista’s startup valuation calculator, you can get an accurate valuation of your company within 20 minutes.
- Reliable market data – It is practically impossible to obtain the market value of your startup without the help of external resources and data. However, with Eqvista’s online startup valuation calculator, this is not a problem anymore because it uses trusted and reliable market data from credible sources.
- Affordable pricing – Why spend hundreds or thousands of dollars to get the value of your startup? Eqvista’s startup valuation calculator is one of the most affordable and accurate valuation tools on the market, with packages starting from $89; Eqvista’s valuation calculator is affordable and within your reach.
How to use our startup valuation calculator to calculate your startup value?
Eqvista’s startup valuation calculator is a user-friendly tool that is designed to provide accurate and fair valuations within minutes. So, how to use startup valuation calculator? Well, the first step is to visit Eqvista and sign up for free to get started. Following are the steps to use the calculator:
- Once you are registered with Eqvista, click on the startup valuation software page.
- Then, you are required to answer the 30 questions by choosing the appropriate answer from the multiple-choice questions. The questions are based on 5 key factors, which were discussed above.
- Once you have answered all the questions, your startup valuation report is displayed on the screen. You can either download the report from the screen or save it in a file. Isn’t it simple and easy to use? In a matter of a few clicks, you will be able to get an accurate valuation and detailed report of your company.
Value your startup with Eqvista!
Are you wondering about the value of your startup? Is it high or low? Will you be in trouble if you don’t get the accurate value of your company? If you are worried about these questions and more, then worry no more. Easily calculate the value of your startup by using Eqvista’s startup valuation calculator. The calculator is designed to provide you with the most accurate and fair startup valuation based on objective and credible data. What are you waiting for? Signup at Eqvista and calculate the value of your startup today!