Podcast

How to Value a Startup in Under 10 Seconds (Episode 2, Part 3)

By 21 January 2018 No Comments

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The Story

Arriving at a reasonable valuation is an art form that is one part negotiation and two parts
science. If you like digging into the numbers, this episode of The Lead Investor Show is for you.
In the final instalment of my conversation with Emlyn Scott – CEO and Co-Founder of
CapitalPitch – he lays out some of his thoughts and rules of thumb for valuing early stage
investments. We run through a variety of different scenarios and get his approach in a rapid fire
sequence of ‘how would you do it’. This aside, we touched on down rounds, inflated valuations
and the differences between the Australian market compared with the U.S., Israel or Asia.
Emlyn is quietly bullish about the future of the market in Australia, but also stressed how
important a nuanced approach will be for investors.

The Lead Investor Podcast E2P1 Quote Emlyn Scott
In today’s episode you will learn:

  • The two primary factors that allow you to value a startup in ten seconds
  • The pros/cons of different valuation methods and some critical factors to consider
  • The consequences of having a risk averse culture (both in terms of founders and
    investors)
  • The current state of the early stage investment marketplace in Australia
  • The critical importance and role of a lead investor
Items mentioned in today’s show:

  • Discounted cashflow valuations (DCF)
  • Emlyn’s thoughts on the future of the Australian capital markets
  • Y-Combinator and their famous SAFE approach to equity
  • Amazon and Uber being ‘pre-profit’ or companies operating at a loss
  • Monthly recurring revenue (MRR)