The method of valuation by discounting free cash flow, better known under the anglicism "discounted cash flows" (DCF) represents one of the approaches most used in the financial valuation of companies. It is more relevant for startups that are already generating revenue, but have a proven methodological soundness in calculating the value of a business. The quality of the valuation by DCF will depend on the reliability and consistency of the startup's business plan. This is why, in order to counterbalance the frequent over-optimism of entrepreneurs in their financial forecasts, the evaluation of DCFs by Estimeo always takes into account an alternative scenario combining an algorithmic generation with an expert human analysis in order to objectify the business plan. Based on the startup's forecast financial flows, the valuation is calculated by adding the discounted free cash flow.
