Valuation for Startups Using Multiple Approach

Go to Course: https://www.coursera.org/learn/valuation-multiples

Introduction

### Course Review: Valuation for Startups Using Multiple Approach #### Overview "Valuation for Startups Using Multiple Approach" is a comprehensive online course offered on Coursera that delves into critical methods for valuing startups, particularly using multiple methods like PER (Price Earnings Ratio), PBR (Price to Book Ratio), and PSR (Price to Sales Ratio). As startups often grapple with the challenge of negative earnings, understanding these specific valuation methods becomes essential. This course not only focuses on these ratios but also explores concepts like pre-money and post-money valuations, providing a well-rounded toolkit for aspiring entrepreneurs, investors, and financial professionals alike. #### Course Structure This course is structured into five key modules, each focusing on a different aspect of valuation, making it easily digestible for learners: 1. **Valuation Based on Comparable Firms**: In this foundational module, you will explore the essential multiples used in company valuation, particularly focused on PER, PBR, and PSR. The course discusses why PER is less applicable for startups due to frequent negative earnings, guiding you to rely more on PBR and PSR for practical valuation approaches. You will finish this module with the ability to calculate these ratios confidently. 2. **Pre & Post-money Valuation**: Understanding the difference between pre-money and post-money valuations is crucial for any investment discussion. This module provides clarity on these concepts, ensuring you leave with the ability to differentiate between the two valuation methods, which is vital when negotiating funding or presenting your startup to investors. 3. **Financial Statements**: Financial statements provide a snapshot of a company’s performance. Here, you will get an overview of the balance sheet, income statement, and cash flow statement, with an emphasis on how to interpret these documents effectively. This knowledge is foundational for anyone looking to assess a startup’s health and make informed decisions. 4. **Cash Flow**: This module dives deeper into cash flow, explaining its identity, which incorporates cash flow to assets, creditors, and stockholders. You'll learn how to calculate cash flows accurately, a skill that dovetails nicely with your understanding of financial statements from the previous module. Additionally, wrap-up review lectures help solidify your understanding of the course material. 5. **Case Study**: The course culminates in a practical case study involving Ysom, Inc, founded by Professors Shin and Lee. In this hands-on module, you will apply everything you have learned by computing cash flows and creating financial statements for a real startup scenario. This practical application reinforces theoretical knowledge, making it an essential part of the learning experience. #### Recommendations I highly recommend this course for a variety of audiences: - **Aspiring Entrepreneurs**: If you are looking to launch a startup, understanding valuation is crucial for attracting investors. This course provides you with the necessary tools to communicate your company's worth effectively. - **Finance Professionals**: For those already working in finance, this course adds to your repertoire of valuation techniques, specifically tailored to the unique challenges startups face. - **Investors and Analysts**: Understanding how to evaluate a startup's valuation critically will enhance your capabilities in identifying potential investments. #### Conclusion "Valuation for Startups Using Multiple Approach" is a valuable resource that distills complex financial concepts into comprehensible segments. With practical applications and strong theoretical foundations, this course equips you with the skills needed to assess startup valuations effectively. Whether you're an entrepreneur, an investor, or someone interested in finance, this course is definitely worth considering for anyone seeking to deepen their understanding of startup valuation methods."

Syllabus

Valuation Based on Comparable Firms

In company valuation, the most often used multiples are PER, PBR, and PSR. PER is the ratio of stock price per share to earnings per share. Since most startups have negative earnings, you cannot use PER in starup. It is the reason why you should know PBR or PSR for startup valuation. After this module, you will be able to explain the concept of those multiples and calculate them easily.

Investors often talk about the pre-money or post-money valuation of a company at the time they invest. This module will introduce you to concepts of pre-money and post-money valuation. By the end of this module, you can distinguish pre-money and post-money valuation.

Financial statements summarize information about a firm. In order to evaluate and diagnose performance for your startup, your first step is to assess the company’s current condition and interpret financial statements. Thus, through this module, you will briefly learn main financial statements: balance sheet, income statement, and cash flow statement.

In this module, you will learn cash flow identity which consists of cash flow to assets and cash flow to creditors and stockholders. Furthermore, you are able to calculate cash flow. Basically, this module is strongly related to module 3, financial statements. Students are encouraged to review all contents in module 3. Lastly, wrap-up review lecture are provided.

In this module, you will deal with Ysom, Inc which was founded in 2015 by Professor Shin and Professor Lee. The purpose of this module is to compute cash flows and create financial statements what you have learned during four weeks.