Venture Capital Investments
Lifecycle
Called as a further issue of shares, valuation of VC’s investments is compulsory by registered valuer[Section 62(1)(c)]. The average age of Company raising Series A funding is 3 to 4 years. Overvalued companies at Seed Level may end up in a death trap as VCs may not proceed with Series A and Series B funding. This is because VCs do not get 2x or 3x returns from their investment at Seed Level. Hence, identifying realistic valuation at all levels of funding is a crucial part. Here, the value (science) facilitates the pricing (transaction).
Venture Capital Investments
Lifecycle
Called as a further issue of shares, valuation of VC’s investments is compulsory by registered valuer[Section 62(1)(c)]. The average age of Company raising Series A funding is 3 to 4 years. Overvalued companies at Seed Level may end up in a death trap as VCS may not proceed with Series A and Series B funding. This is because VCs do not get 2x or 3x returns from their investment at Seed Level. Hence, identifying realistic valuation at all levels of funding is a crucial part. Here, value (science) facilitatespricing (transaction).
Buy Side
- Greater Uncertainty = Greater Risk = Greater Required Returns = Lower Asset Value
- How to quantify impact of crisis on revenues, supply chain, and operations?
- Identification of Comparable Companies that are ‘good proxy’
- Is multiple based on ‘Maintainable Earnings’ & ‘Maintainable Revenue’?
- What is possibility of Debt Covenant Breach?
- Scenario Analysis and What if Scenarios
Sell Side
- Fair Value does not equal to ‘Fire Sale Price’
- How to identify price in orderly transaction?
- Avoiding ‘Double Dip’
- Use of Historical Multiples (LTM) Vs. Forward Looking Multiples (NTM)
- Absence of actively traded prices of unlisted entities
- Defending Values in volatile & dislocated markets
Have more questions?
Possibility of failure
Small revenues and operating losses
Existence of ESOP
Valuation Complexities
Private entity (non-comparable listed entities
Heavy R&D expenses
Young companies with short histories
Analysing potential to survive
Valuation Complexities
High growth potential
No revenues and operating losses
Uncertain call future potential
Primary asset = IP
Expected ESOP
Negative bottom line
Private entity (non-comparable listed entities)
How can we help you?
Application of defendable judgements
Considering efficiency of existing assets and value of growth assets
Data driven assumptions
Proper consideration of Share Based Payment by our IFRS Experts
Observable Deal Prices from Global Database
Analysing beta against market index
Calibration to Price of Recent Investments
Reflect entity specific risks
Identifying multi-growth stages and adjust forward looking revenues and profits
How can we help you?
Application of defendable judgements
Data driven assumptions
Observable Deal Prices from Global Database
Calibration to Price of Recent Investments
Identifying multi-growth stages and adjust forward looking revenues and profits
Considering efficiency of existing assets and value of growth assets
Proper consideration of Share Based Payment by our IFRS Experts
Analysing beta against market index