Taking the Next Step: Understanding Startup Valuation
Attracting investors and getting the funds needed to grow a business or a startup can lead to success. Many businesses aspire to work with angel investors in developing their ideas further. The best startups we have today also went through the same process of business valuation. What’s important is knowing how your startup is valued before you start meeting investors. Reasonable valuation can be a determining factor in getting the right investors onboard.
According to Northeastern University and its Master Degree in Finance online department, there are three main methods that startups can use to perform valuation. The asset-based approach is the most basic method, with the valuation based on the value of your business’s assets. The income-based approach, on the other hand, takes the potential income of a startup into consideration. Lastly, we have market-based valuation, which is what many angel investors use to value businesses today.
Learn more about these three approaches from the Key to Valuation infographic by http://onlinebusiness.northeastern.edu/.