Business credit system Red Bull for China shop | TOI | 3rd March 2019

Business credit system Red Bull for China shop | TOI | 3rd March 2019

CEED May 15, 2019

Before investing in a start-up, the first question that venture capitalists ask is regarding its worth. Evaluating a company in its prerevenue stage is a challenge.

There are seldom any agreed-upon terms. While entrepreneurs want their babies to be valued as high as possible, the investors want the value low enough for it to be a profitable risk.

Investors have a variety of methods to evaluate start-ups. The venture capital method values a company based on expected rate of return at the time of exit. The risk factor summation method compares 12 characteristics of the company with their fundable company yardstick. These are just two examples.