Early-stage companies are like teenagers, according to Antonella Puca, CPA/ABV/CEIV. “They have tremendous potential,” she said, “but we don’t know how it will be fulfilled.” Given the volatile and uncertain prospects for early-stage companies, valuation professionals approaching valuation of a venture capital deal should be aware of some of the challenges involved.
Predicting the future
“By definition, an early-stage company is not profitable, has negative cash flow, and will need to rely on capital from investors to support it,” noted