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Afraid to say this isn't quite right - we followed this path. Essentially, the moment you have a functioning, profitable company, your value becomes rooted in
by madaxe_again 13y ago
Afraid to say this isn't quite right - we followed this path.
Essentially, the moment you have a functioning, profitable company, your value becomes rooted in multiples of ebitda. When you have a pie-in-the-sky idea, gaggles of engineers, huge running costs and no product, your value is based on "????? Profit!"
We're 8 years in, driving about £1bn of ecommerce transactions a year, and there is no exit.
- brc 13y agoI would guess the valuations are based on the expected targeted size of the market and defensible market position. Without a reason why your current growth will accelerate, it's only reasonable why a valuation would be done on a cashflow/profitability basis. You also have to remember that you got to choose your business strategy to this point, you presumably can't be removed from your own company, and your ownership is worth something. There is always an exit for a well-run business, but it's probably not going to be through a VC funded growth-then-exit unless they can see a way to 10x your existing business at a minimum.