Information Risk-free Rate Terminal Value 
Equidam
APRIL 26, 2025
a 409A valuation in the US), planning exit strategies, and informing overall business planning. High failure rates are a stark reality in the startup world, adding another layer of risk that must be accounted for. However, particularly for early-stage ventures, valuation presents unique challenges.
Brian DeChesare
MAY 3, 2023
The DDM is more grounded because it’s based on the company’s actual distributions and potential future value. And it values the company today based on the present value of its dividends and that potential future value (either the stock price or the Equity Value via the Terminal Value calculation).
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Valutico
OCTOBER 20, 2022
Well, the short answer is after that forecast period where we estimate each year’s cash flows then discount them, we add a single number at the end to account for all the theoretical years in the future, called the Terminal Value (TV). Let’s pause here to acknowledge the big assumption that ‘interest rates will be 10% every year’.
Equidam
APRIL 22, 2025
3] , [6] For the startup itself, valuation informs strategic planning, facilitates goal-setting, aids in resource allocation, and provides a benchmark for measuring progress. [3] 18] Value: Value represents the intrinsic, fundamental worth of the company. [17] Total Valuation = Sum of all Criterion Values.
Equidam
APRIL 22, 2025
This de-risks the market adoption aspect. Essentially, all verifiable information about the company’s present serves to build credibility and reduce the perceived risk associated with achieving the projected future state. This premium rises when perceived market risk increases. [27]
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