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OCV Public Handbook/💰Fundraising/💵Valuation Methods

Valuation Methods

At their core, the following two methods of valuation are a net present value calculation.
Discounted Cash Flows
Venture Capital Method
A net present value can be determined from a future value, a compounding rate, and a number of periods compounded.
If an investment were to grow at a fixed rate of return over a given period of time, the following can be determined.
End Value = Beginning Value * (1 + Rate of Return)^(Periods of Time)
A net present value simply takes a look at an expected end value and derives a present value given a rate of return and time periods.
Net Present Value = End Value / (1 + Rate of Return)^(Periods of Time)