Discounted Cash Flowsmethod

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.

Valuationmethods

Direct declarative method

The direct or dilutive declarative method takes into account the entrepreneur's personal expectations...

 

Direct declarative

DCF method

The method of valuation by discounting free cash flow, better known under the anglicism "discounted cash flows"...

 

Discounted Cash Flows

VC method

The VC method is a relevant valuation approach as soon as the startup supports some growth and presents a solid business history...

 

Estimeo Venture Capital

Scorecard method

The ScoreCard method, or “Bill Payne Method” after its theorist, is based on Estimeo's pillar scoring...

 

Scorecard

Comparative Market method

This method developed by Estimeo presents a logic that is not very different from the ScoreCard method but uses...

 

Comparative Market

Step-Up method

The Step-Up method is only suitable for very young companies (pre-seed and seed), and generates an incremental valuation...

 

Step-Up