How much is your startup worth?: criteria for calculating it
Posted: Tue Jan 28, 2025 10:02 am
Negotiating, setting objectives, setting goals and establishing strategies; knowing one's own market value is essential for any company located in volatile or highly competitive sectors .
This truth is especially important for startups , since for the last two years their demand has skyrocketed, distorting the real and more or less objective value of the economic activity analyzed.
Born in the digital age, these highly flexible and innovative businesses have become hopeful champions in the face of the COVID-19 pandemic and the technological challenges of the future .
For all these reasons, today at MÁSMÓVIL Negocios we are trying to list a series of criteria so that you can calculate the value of your project —or invest in similar ones— and determine whether it is mired in a bubble of expectations or not.
company value to sell it
You may also be interested in: “ Main financing trends for startups in 2021 ”
A startup bubble?
Although the crisis has brought down most thailand number data economic indicators, neither lockdowns nor restrictions have been able to stop the growth of investment rounds .
Thus, in its quarterly study, Bankinter reaffirmed the hope of the funds in these businesses, drawing a clear conclusion: the total amount of money allocated has been reduced, but the number of rounds has grown .
“ During 2020 we had between three and five months of inactivity due to Covid-19, but since after the summer activity has restarted and, unless there is another crisis, we predict a very busy 2021 ,” says Joshua Novick , head of Bondo Advisors .
Will the startup's valuation be affected? Yes and no. It will depend on the sector and its involvement with the Digital Transformation that is sweeping through the economy. In any case, and as with other assets, a company is worth what you want to pay for it .
According to the Law of Supply and Demand, the so-called “startup bubble” would be impossible, because the market would always tend to self-regulate. However, to make this claim a reality, all socioeconomic factors would have to be ignored.
The price of startups in the face of the pandemic
The crisis has weakened many sectors , destroying the business prospects of hundreds of startups, which have ended up being fodder for other companies and investors. “ We are seeing a polarization in startup valuations ,” says Novick.
“ On the one hand, there are companies that are having a hard time, in many cases due to the pandemic, which some buyers are taking advantage of to buy at a lower price . On the other hand, there are startups with sky-high valuations .”
According to the entrepreneur, the problem lies in the umbrella effect of “digitalisation”. That is, believing that every company included in the trend is profitable. The numbers, in the long term, could burst the supposed “bubble”.
“ There are companies that have a clear target and are willing to pay well for it, but a good due diligence must analyze not only the numbers, but also the technical part ,” he clarifies. FOMO , in fact, could be luring corporates .
" We have closed very large rounds that would have been unthinkable a few years ago, and that ultimately means that valuations are higher and there is a feeling of a bubble ," adds Eneko Knörr , investor and co-founder of Onyze .
An example to put into perspective
To understand the cautious mindset that experts are highlighting, we can focus on Xpeng , the Chinese car manufacturer that closed a €1.645 billion financing round last January .
Both Agricultural Bank of China Ltd and the other bidders decided to invest in this company for two reasons: the support shown by the market in previous rounds, and the estimated growth in the automotive electrification market .
From a rational perspective, investing in Xpeng would be the most logical decision. Following Novick's advice, however, one should go beyond the hype to analyze its business model, its objectives and the real viability of the product.
Criteria for calculating the value of a startup
Given the volatility of the market and the uncertainty about the future , is it possible to calculate the real value of startups? Although this is always a slightly subjective calculation, the answer is yes.
Startupxplore , the largest community of Spanish and European startups, collects a series of criteria that would not only be valid for calculating the demand for a business, but also for any company with growth potential .
This truth is especially important for startups , since for the last two years their demand has skyrocketed, distorting the real and more or less objective value of the economic activity analyzed.
Born in the digital age, these highly flexible and innovative businesses have become hopeful champions in the face of the COVID-19 pandemic and the technological challenges of the future .
For all these reasons, today at MÁSMÓVIL Negocios we are trying to list a series of criteria so that you can calculate the value of your project —or invest in similar ones— and determine whether it is mired in a bubble of expectations or not.
company value to sell it
You may also be interested in: “ Main financing trends for startups in 2021 ”
A startup bubble?
Although the crisis has brought down most thailand number data economic indicators, neither lockdowns nor restrictions have been able to stop the growth of investment rounds .
Thus, in its quarterly study, Bankinter reaffirmed the hope of the funds in these businesses, drawing a clear conclusion: the total amount of money allocated has been reduced, but the number of rounds has grown .
“ During 2020 we had between three and five months of inactivity due to Covid-19, but since after the summer activity has restarted and, unless there is another crisis, we predict a very busy 2021 ,” says Joshua Novick , head of Bondo Advisors .
Will the startup's valuation be affected? Yes and no. It will depend on the sector and its involvement with the Digital Transformation that is sweeping through the economy. In any case, and as with other assets, a company is worth what you want to pay for it .
According to the Law of Supply and Demand, the so-called “startup bubble” would be impossible, because the market would always tend to self-regulate. However, to make this claim a reality, all socioeconomic factors would have to be ignored.
The price of startups in the face of the pandemic
The crisis has weakened many sectors , destroying the business prospects of hundreds of startups, which have ended up being fodder for other companies and investors. “ We are seeing a polarization in startup valuations ,” says Novick.
“ On the one hand, there are companies that are having a hard time, in many cases due to the pandemic, which some buyers are taking advantage of to buy at a lower price . On the other hand, there are startups with sky-high valuations .”
According to the entrepreneur, the problem lies in the umbrella effect of “digitalisation”. That is, believing that every company included in the trend is profitable. The numbers, in the long term, could burst the supposed “bubble”.
“ There are companies that have a clear target and are willing to pay well for it, but a good due diligence must analyze not only the numbers, but also the technical part ,” he clarifies. FOMO , in fact, could be luring corporates .
" We have closed very large rounds that would have been unthinkable a few years ago, and that ultimately means that valuations are higher and there is a feeling of a bubble ," adds Eneko Knörr , investor and co-founder of Onyze .
An example to put into perspective
To understand the cautious mindset that experts are highlighting, we can focus on Xpeng , the Chinese car manufacturer that closed a €1.645 billion financing round last January .
Both Agricultural Bank of China Ltd and the other bidders decided to invest in this company for two reasons: the support shown by the market in previous rounds, and the estimated growth in the automotive electrification market .
From a rational perspective, investing in Xpeng would be the most logical decision. Following Novick's advice, however, one should go beyond the hype to analyze its business model, its objectives and the real viability of the product.
Criteria for calculating the value of a startup
Given the volatility of the market and the uncertainty about the future , is it possible to calculate the real value of startups? Although this is always a slightly subjective calculation, the answer is yes.
Startupxplore , the largest community of Spanish and European startups, collects a series of criteria that would not only be valid for calculating the demand for a business, but also for any company with growth potential .