Risk Evaluation

How is Enterprise Risk calculated to discount the Purchase price froma VC perspective

2 Answer(s)


Do you mean VC's who invest in early stage tech startups?

In such cases discount rates are rarely used. Young companies have very unpredictable cash flows and future is very difficult to predict. Hence using a discount rate based DCF to value is very unreliable.

Hence such companies are typically values using comparabale trading or comparable acquisition analysis.


Your valuation will mostly depend on what stage your company is in.