Introduction: Company valuation is the analytical process to understand how much

Introduction:
Company valuation is the analytical process to understand how much the company is worth currently or in the future and determine the firm’s fair value. there are many of techniques used for doing the valuation for the firm like the capital asset pricing model or dividend discounted model. And these techniques for some it could be standard and for others a mechanical formula. the interest in the valuation for those companies that in a fundraising round and trying to make the valuation to negotiate with potential investors. And from investors’ side, they need to make a decision-based on the present about the future but the challenge here if the company is in a startup phase, that is becoming a very different discussion.
The startup company valuation has a lot of challenge the first one that there are no presents of the startup companies to estimate the future, some companies have no history, with small revenues or with no revenues, and more challenges like the issue of survival, many startup companies cannot survive, Multiple claims on equity which is repeated attempts to fundraise is exposing the earlier investors to reduce their value by deals offered to subsequent equity investors.
The fact that startup companies with no history, depends on private investment and not public investment, have the issue of surviving, making the valuation more challenging and difficult even when using the discounted cash flow methodology or guideline public transaction methodology.
We have been trying to understand the best way to valuate a tech company at an early stage. The answers have come from different places:
• talking with experienced venture capitalists and accelerators around the globe
• exploring the available services
• doing some research about the numbers on commercial databases
• trying different methods
• studying the theory behind those methods
• talking and listening to a lot about the topic
At the end, our conclusion is:
“Startup valuation is more art than science.” (Luis Almaza, August 2020).
In the last 15 – 20 years, the world businesses thinking moved from manufacturing businesses to tech businesses. the internet world attracted the global economy to shift from manufacturing companies to services companies and building platforms (Dot-com) to provide their services from their and from here the startup companies with the new ideas that we did not saw before for any type of manufacturing are becoming a tech startup company looking for investors and good valuation.
The tech startup company valuation is a problem and needs to be researched scientifically. (Luis Almaza, August 2020)