Talking Business: The Inevitable Question of Startup Valuation

Emmet McGonagle

Jun 17, 2022

Teruel Carrasco - president of Valhalla Private Capital, co-founder of Radar Endeavour Group Inc and CEO of Lending Assist - has discussed the intricacies of valuing a startup at pre-seed stage.


“There’s a lot of valuation inflation going on, and it's distorting early stage founders' ability to properly value their company,” Teruel began.


With expertise in improving leadership, team-building, business development and overall strategies within startups and established companies alike, Teruel approaches the “inevitable question” of valuation through a range of factors including “ intellectual property, sales, people involved and opportunity”.


“The numbers I hear are all over the place, but there are methodologies to properly state the number,” Teruel said.


Valhalla’s vice president of entrepreneur engagement noted that while some startups are quick to boast $10m valuations, these figures can be industry specific.


On the topic, he explained: “A $10m valuation in a science based company is different than a $10m valuation of a cloud-based app or a cannabis growth company.”


“When putting together a SaaS-based app, for example, the capital requirements to go to market are less than a pharmaceutical company as they don’t need to go through years of rigorous regulatory work such as FDA approvals, testing and trials.”

 

Through contrasting the “vastly different” capital requirements of pharmaceutical companies to the “less capital intensive” requirements of a Saas-based app, Teruel maintains that a $10m valuation on the latter would typically indicate that the company is “making several million dollars in revenue already”, alongside “a good website and a staff of around 10 people”.


“They're growing, and good things are happening within the company,” Teruel continued.


“A $10m valuation of a pharmaceutical company, however, can still be five or six scientists that are still working through the regulatory hurdles for launch,” he concluded.


Teruel also discusses some best practices for pitching to investors within North America’s startup ecosystem.


Do you have a question about angel investing? Get in touch with Valhalla Private Capital via our contact page.

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