Scorecard Valuation Methodology
Posted by Bill Payne on October 20th, 2011: http://blog.gust.com/valuations-101-scorecard-valuation-methodolog
VALUATION WORKSHEET
Weighting Factors and Issues
IMPACT ON THE VALUATION OF PRE-REVENUE, STARTUP COMPANIES
0-30% Strength of the Entrepreneur and the Management Team
Impact Experience
Err:520 Many years of business experience
Err:520 Experience in this business sector
Err:520 Experience as a CEO
Err:520 Experience as a COO, CFO, CTO
Err:520 Experience as a product manager
– Experience in sales or technology
— No business experience
Impact Willing to step aside, if necessary, for an experienced CEO
— Unwilling
0 neutral
Err:520 Willing
Impact Is the founder coachable?
Err:520 yes
— No
Impact How complete is the management team?
– Entrepreneur only
0 One competent player in place
Err:520 Team identified and on the sidelines
Err:520 Competent team in place
0-25% Size of the Op
Impact Size of the target market (total sales)
— < $50 million
Err:520 $100 million
Err:520 > $100 million
Impact Potential for revenues of target company in five years
— < $20 million
Err:520 $20 to $50 million
– > $100 million (will require significant additional funding)
0-15% Strength of the Product and Intellectual Property
Impact Is the product defined and developed?
— Not well define, still looking a prototypes
0 Well defined, prototype looks interesting
Err:520 Good feedback from potential customers
Err:520 Orders or early sales from customers
Impact Is the product compelling to customers?
— This product is a vitamin pill
Err:520 This product is a pain killer
Err:520 This product is a pain killer with no side effects
Impact Can this product be duplicated by the others?
— Easily copied, no intellectual property
0 Duplication difficult
Err:520 Product unique and protected by trade secrets
Err:520 Solid patent protections
0-10% Competitive Environment
Impact Strength of competitors in this marketplace
— Dominated by a single large player
– Dominated by several players
Err:520 Fractured, many small players
Impact Strength of competitive products
— Competitive products are excellent
Err:520 Competitive products are weak
0-10% Marketing/Sales/Partners
Impact Sales channels, sales and marketing partners
— Haven’t even discussed sales channels
Err:520 Key beta testers identified and contacted
Err:520 Channels secure, customers placed trial orders
— No partners identified
Err:520 Key partners in place
0-5% Need for additional rounds of funding
Err:520 None
0 Another angel round
— Need venture capital
0-5% Other
Err:520 Positive other factors
— Negative other factors
