Remove EBITDA Remove Market Risk Remove Weighted Average Cost of Capital
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9 Startup Valuation Methods: 5 to Use, 4 to Avoid

Equidam

revenue multiple, ARR multiple, EBITDA multiple) derived from recent acquisitions or funding rounds of supposedly similar companies. While appealing due to its market-based simplicity, using this as the primary valuation driver for startups is fraught with peril. Beta measures the volatility of the company relative to the market.

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Discounted-Cash-Flow-Analysis: Your Complete Guide with Examples

Valutico

d is the discount rate (which is usually the weighted average cost of capital (WACC), r in our previous example). Some practitioners will use an average of both methods. . Ce = Cost of Equity. Rf = Risk-free Rate. Rm – Rf) = Equity Market Risk Premium. Cp = Cost of Equity Premium.

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Startup Valuation: The Ultimate Guide for Founders

Equidam

2] Startups typically lack significant historical financial data, often operate with negative profits initially, rely heavily on private equity or venture capital rather than traditional bank loans, and face a much higher risk of failure. [1] This premium rises when perceived market risk increases. [27]