From 2006 to 20 10, the two founders invested in 45 technology startups, including Twitter. After that, the two became famous and became famous angel investors in the American venture capital circle. Later, he successively invested in famous technology companies such as Instagram, Airbnb, Pinterest and Slack.
1. valuation method for the last round of financing
Some VCS judge the existing value of a company through the valuation in the last round of financing, and then calculate the value of an institution in this company according to the valuation and ownership ratio.
2. Benchmarking company analysis method
There are also some venture capital institutions, especially those with sustained income or profit, which will use listed companies for benchmarking analysis.
Usually, venture capital institutions will also use "DLOM" (lack of liquidity discount) to reduce the value of the company. The reason for the discount is that these stocks are private and cannot be traded freely in the open market, so their stock value is relatively low compared with listed companies. DLOMs is usually 20%-30%. In the above example, if 30% DLOM is used, the discounted value will be $35 million ($50 million *( 1-30%)).
3. Option Pricing Model (OPM)
So how do we use the above methods to evaluate the investment in Slack?
1. last round of financing valuation method: under this method, the value we enjoy on Slack is 380 million dollars (10% * 3.8 billion dollars), so the return on investment is 38 times.
2. Benchmarking company analysis: This method is more troublesome because it is difficult to find comparable listed companies. However, according to public data, as of 20 15, Slack's annual recurring income (ARR) was $64 million. To simplify the calculation, we assume that the time difference increases at the rate of 100% per year.
3. Option pricing model: The valuation of this method is the most trustworthy, after all, we spent money to buy software to use. According to the calculation results, under the premise of reasonable assumption of exit time and volatility, the return on Slack investment calculated by OPM method is 16 times, which is completely different from the previous 38 times and 20 times.
Our organization adopts OPM valuation method.
Finally, venture capital has a long gestation period, and the whole process is more described by "J curve".