A couple of days ago I wrote a post on how to value a startup. In it I mentioned that back in 2000 I had developed an Internet business valuation model. I got 2 mails from readers (a whole 50% of my readership….) asking me to post it.
Voila:
Step 1: Find some publicly traded comparables.
Notice the crazy valuations for Looksmart ($5B). In my post I said Looksmart was worth $1B… it was actually $5B… yikes! Anyway, you also insert a bunch of metrics, at the time I did not even use profits since most were losing cash, but I did include uniques, pageviews and revenues. Incidentally, I worked at Mamma who had 5M uniques when Google was an unknown. But since it too was private, I sort of figured they were the company I had to watch.
Step 2: You automatically get multiples per metric, in columns 10, 11 and 12.
Step 3: Projections of Value, Applying a Discount for Liquidity.
You will see that by then, Google had zoomed past us and according to my metrics was worth nearly $1B, we were worth in my model $222M.
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