Valuation is the analytical process of determining the current (or projected) worth of an asset or a company. In the case of a business valuation - the term valuation means - the value of the company's shares. That is the amount that a specific entity will be willing to pay to receive shares in the company.

Every company has assets acquired by loans (foreign capital) and owners' investments (equity). That is, when it comes to company valuation - the meaning is – finding the value of the shares.

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A startup's valuation is different from a valuation of a company that has been active for several years. The reason - an existing company has generated sales and profits for its shareholders. By its very nature, a startup is a new entity, which has not yet developed a product and has not sold it. When evaluating the startup, the qualitative factors are taken under consideration instead of the quantitative.

This difference has a strict application regarding the ability of the business valuer to implement the basic formula of value, business valuation.

In the previous chapter, we had presented the basic formula of value:...

There are a number of benefits of evaluating a startup. Ultimately all the explanations focus on one thing - maximizing value.  The value maximization - both the company's value as well as shareholders’.

Maximizing Satartup’s Value

A successful startup is recognized by its gradual increase in performance and by an enhanced outcome and revenue....