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The Art (And Science) Of Valuation: Here’s How Venture Capitalists Value Your Startup

From a range of detailed financial metrics to market experience and gut feel, the final valuation can come down to a mixture of science and art

By | | www.entrepreneur.com

If you’re an entrepreneur and keen to attract investment in your high-potential startup, you are probably thinking about venture capitalists (VCs). But what do VCs want? What information should you provide? And how exactly do they value your company?

From a range of detailed financial metrics to market experience and gut feel, the final valuation can come down to a mixture of science and art. The good news is that our region continues to attract the attention of VCs. According to the Emerging Venture Markets Report published by MAGNiTT in early 2021, MENA startups received a record US$1 billion in funding in 2020, up 13% from 2019.

Here, we take a closer look at how VCs arrive at a startup valuation.

So, what are high-potential startups?

The kind of startups we are talking about here are high-potential tech companies with products or services in untapped markets. Those products or services will solve problems, and the startup, already generating revenue, will have the potential to grow rapidly over the next three to five years.

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www.entrepreneur.com
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