New Feature: Company Valuation

Hey everybody. This has been almost a year in coming! So we are really pleased to announce the ability to get data-driven company valuations on VR as a service. You can perform your own valuation using public comps only or you can subscribe where you get access to M&A comps as well and our research team will help you do the valuation! Once you create a valuation it is marked-to-market, meaning that it will updated daily based on how the markets change. We update your valuation daily based on stock market data as well as M&A data from our own proprietary M&A database.

Disclaimers!!!! Valuation is an art and a science, but arguably more art than science. The results are only ever as good as the data that goes in. We use a very, very simplified valuation algorithm right now (we will add complexity over time) that probably gets you to within 10-15% or so of a reasonable valuation estimate (assuming there are no signifcant balance sheet issues that our model doesn't handle). That said, you only know the value of a company when it is bought or sold in a transaction. So our models can be off significantly depending on the way that a deal is negotiated. Also, we largely ignore intagibles and many other balance sheet implications (we do look at cash and debt levels). Finally, the earlier-stage the company, the more difficult it is to value that company and the wider the margin of error. We have set up our system to value any stage of company by allowing the user to weight projected revenue and earnings more or less heavily than current results. Please note, it is up to you to assign the weightings on future results. Early-stage VCs have to do this all of the time, later-stage private equity pros shiver at the thought. Just remember that everybody, including early-stage investors, will take future projections with a grain of salt. The valuation tool works best with companies that already have results.

So, after all of these disclaimers, why should I use the valuation service? It is stinkin' amazing, that's why. Where else can you quickly estimate the value of private companies on the web for free? Even if it is directional, you can see how the company's value changes over time. I like to compare us to Zillow.com. Zillow is frequently wrong but I still check it all of the time because I want to know what is going on in the market. The same holds true for our valuations. Also, while we want to put heavy disclaimers behind our valuation tool, we don't disclaim our valuation ratio data. This data is rock-solid, heavily researched and accurate. We have paying subscribers who use this data all of the time as a basis for very big decisions. We are adding M&A deals all of the time. Those ratios are like a company version of the real-estate tool MLS (multiple listing service). We are constantly tracking the actual sales price and valuation ratios for deals that have actually happened. So, while our valuation estimates involve a lot of art and estimation, the valuation ratios that form the basis of our estimates are completely reliable. If you ever find errors or problems here, let us know and we will remedy it immediately.

I have attached above a screen shot of a company I valued. To access the valuation tool, log-in or register, then go here: http://www.venturereturns.com/valuation/valuationTool.php. You first need to find and save a set of comparables--these are companies (or deals involving companies) that are similar to your company. [Just like real estate appraisers use similar houses as the basis of their valuation estimates, we use similar companies]. Once you do this, click on the Valuation button, enter in some high-level financial information about your company and you are off to the races. The tool will create the chart I showed above for your company and it will also create a "stock price" chart that will show you the valuation of your company over time.