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“Valuing Smoke and Dreams?” Why VC Valuations Aren’t Your Textbook DCFs

  • Valuing startups in the VC world is a different ball game compared to traditional company valuations based on metrics and historical data.
  • Valuing a startup often involves a mix of detective work, predicting future trends, and understanding the founding team's potential.
  • Traditional valuation methods like Discounted Cash Flows (DCF) may not be applicable to startups with uncertain revenue streams and market positions.
  • In venture capital, valuing a startup is more about belief, potential, and the founding team's capabilities rather than concrete financial metrics.

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