How’s your scenario modeling for start-up valuations?

BVWireIssue #107-3
August 17, 2011

There’s been a lively discussion of late on LinkedIn’s Valuation Group about early-stage valuations. For example, Noreen Dornenburg (Avondale Appraisals) suggests analysts look at specific facts and circumstances, such as:

  • Is this a niche product or a mass market one?
  • How good is the management team?
  • Is the plan for the team to manage the whole process, or will they sell the patent? And if the latter, to whom?
  • Is there a workable prototype or is the patent for a product idea or process only?

Craig Cook (Grant Thornton) favors a “scenario-based expected value or real option approach, running the branches” of the analysis until it incorporates “the most dilutive capital-raising rounds.”

Mark your calendars: Most of the participants end by recommending some form of scenario modeling. This can be tricky, so BVR has enlisted expert David Dufenbach (Grant Thornton) to lead the “Advanced Workshop on Monte-Carlo Simulations” on January 26, 2012.

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