Do you really consider that a company with no real assets can be worth as much as $40 billion? Well, you will find out in this short article today.
Today, I think you will benefit from some of the simpler elements of valuing a company. So let’s get started, the 7 essentials that most companies consider when valuing based on milestones.
I was looking for a topic this morning when I came across a Reddit discussion “How do companies like Uber and Ashley Madison value themselves?”. The discussion caught my attention when one of the participants said, “I was reading about the Ashley Madison scandals and how she has sales of $115 million but she values herself at $1 billion.
Even a company like Uber that doesn’t have real asset value of $62.5 billion, where did they get those values?” and I know some of you might have wondered how they got those values as well.
Well, most companies rate themselves based on their milestones. Let me give you an example, if you look at the Uber news, you will see that they always talk about their milestones.
The company proudly announced that they had reached the new milestone on April 14, 2015. Wayne Ting said, “The number of Bay Area driver partners on the Uber platform surpassed 20,000 for the first time… And we weren’t there yet.” not halfway there a year ago.”
Then again on June 28, 2015, they also passed their milestone in South Africa, and this year 2016, they aim to reach another milestone in China. Well, in that case, let’s briefly review the 7 essential elements that most companies look at when valuing themselves:
#1: Business Plan – The first thing you would be proud of is having a business plan. They know the purposes of a business plan, which you can use when you want to raise funds. You can also use it as a marketing tool and as a planning tool.
#2: Money – Money is a very important tool in every business, you know that. They go and raise some money.
#3: People – They hire people too, and remember that the number 1, 2, 3 things investors look at when valuing a company are people.
#4: Products – Another thing is that they build their products, and take them to the market. It could just be a company app or something.
#5: Customers – When there are no customers, there will be no sales, and when there are no sales there will definitely be no profit. They carefully determine who their main customers or their target market are. They can base their target on demographics, or undergraduates or upperclassmen, geographic or whatever.
#6: Marketing – This is very, very important. Marketing is the propeller that propels your products to the desired market, I mean the right market. It also helps your brand gain exposure, when handled effectively.
#7: Risk – What most VC firms do is look at the risk factors of a company, if the company’s stage of risk is lower, they are generally worth more money at all of those stages.
