in economic times During an economic downturn, investors in financial instruments such as mutual funds and ETFs may find their portfolios devalued significantly. So with less money overall, the incentive to invest in risky assets takes a hit.
From an investor’s perspective, the valuation makes the most sense when the startup becomes more difficult to raise money. For example, a company I know in the beverage space, he had a $45 million valuation when valuations were very high. A year later, when the economy was quieter, it was valued at $10 million.
Another company I spoke to in the diagnostics space de-risked their product by showing significant progress and more favorable data. However, as the economy softened, the valuation still fell from $35 million to $20 million.
Angel investors often rate valuations as themselves and as part of an angel investing group. This results in a collective due diligence process aimed at reaching a fair valuation through both the group’s management team and angels from diverse backgrounds. The benefit for founders is that when one angel introduces you to their group, other angels in the group often invest as well.
understand the market
When considering an investment, make sure the valuation is realistic for the type of innovation and market segment, and in line with the state of the economy.
When evaluating a future investment, I make sure it is a product or service that I have a deep interest in and educate myself on the company’s market. , we want to see a clear market worth at least $100 million. We also assess whether your product or service has a significant advantage over your competitors.
Determining a valuation requires understanding the market.
If your company has a minimum market threshold of $100 million in a large Total Addressable Market (TAM), in areas where there is no solution or a significant advantage over existing offerings, Articulate how your company’s innovation solves a huge problem and whether it can be scaled. rapid.
determine your company’s valuation
“What is your rating?” is one of the first questions I ask when considering an investment.
There are two main concepts in valuation: pre-money and post-money.
The pre-investment valuation is the value of the company before the investment and the post-investment valuation shows the value after the investment.
