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investment memorandum a guide for startup founders

Investment Memorandum: A Guide for Startup Founders

The path from ground-breaking concepts to successful fundraising rounds can be intimidating for many business founders. The investment memorandum is a crucial document that forms the basis of this journey. This document is a powerful instrument that informs investors about the potential of your startup and presents a strong case for their investment in your vision; it is not just a formality.

What Is An Investment Memorandum?

An investment memorandum is a document prepared by a start-up company targeting potential investors and outlines the main aspects of the business and the investment opportunity. It is a detailed introduction to your company and provides an overview of your market, product, team and finances. It’s a narrative that highlights your business’s potential for expansion and success by fusing data, analytics, and its own story.

Role And Importance Of Investment Bonds

Investment bonds play a key role in the investment decision making process. They help investors understand the nature of your business, the problem you are solving, and how you plan to earn a return on your investment. A well-crafted note can set your startup apart from the competition, highlight your strengths, and address potential issues. This is an opportunity to generate investor interest and lay the groundwork for in-depth discussions and due diligence.

Main Audiences For Investment Memorandum

Investment memorandum serve a wider audience, even if their primary target audience is potential investors like angel and private equity investors. Advisory boards, possible partners, and even important staff members who wish to know the startup’s financial situation and strategic orientation may find them helpful. You can make sure your pitch resonates with these audiences and achieves its goals of obtaining money and assisting your startup’s growth demands by customizing it for them.

Key Elements Of An Effective Investment Memorandum

Creating an investment memorandum that describes the nature of your startup and attracts potential investors requires careful consideration of its content. Here’s what to add to make your note stand out.

Key elements of Investment Memorandum

1. Summary

The summary is your first (and sometimes only) chance to get an investor interested.It should precisely outline the value proposition, primary goal, and distinctive solution that your startup provides through its goods or services. Make sure you convey the potential for development and profit, and emphasize the market opportunity and your plan for taking advantage of it.

2. Market Analysis

A thorough market analysis shows that you understand the market you are entering. This should include the size of your target market, growth trajectory and key trends supported by reliable data. This section is crucial to convince investors of the significant opportunity your startup is ready to take advantage of.

3. Product/Service Overview

Find out what the startup provides, what issues it resolves, and why it performs better than current options. Provide details regarding the level of development, intellectual property, and any traction or client feedback obtained. This section shows the profitability and scalability of your product or service.

4. Business Model

Your business model describes how your startup plans to make money. Describe your revenue streams, pricing strategy, sales and distribution channels, and partnerships that drive your business forward. The clear and logical explanations presented here will convince investors of the sustainability and profitability of your company.

5. Competitive Environment

Understanding your competition is just as important as knowing your business. Analyze your competitors, their strengths and weaknesses, and how the startup differentiates itself. Highlighting your competitive advantage shows investors why your startup is a better bet.

6. Financial Information

Provide a clear picture of your financial situation and projections. Include current financial data, when available, and detailed projections showing revenue, costs and profitability over time. This section should also explain the assumptions behind your projections and provide a realistic view of your financial planning.

7. Team

Investors invest in both people and ideas. Introduce your team by highlighting their backgrounds, expertise and roles within the startup. Demonstrating a strong and competent team will increase investors’ confidence in your startup’s ability to execute its business plan.

8. Use Of Money

Clearly indicate how you intend to use the investment. Learn how finances drive growth by determining how much to allocate to product development, marketing, sales and other critical areas. Clear and well-founded plans for the use of money can significantly strengthen your desire to invest.

9. Drafting The Investment Memorandum

With the components in mind, it is time to draft the memorandum. The goal is clarity, brevity and impact. Investors are busy; your note should adopt them quickly and strongly support your startup. Use images such as charts and graphs to complement your story, making complex information easy to digest. Above all, tell a compelling story that connects with the reader emotionally and financially.

10. Common Mistakes To Avoid

Avoid common pitfalls such as neglecting the story, underestimating the competition or providing unclear financial information. Each part of your note should build on the last and create a cohesive and compelling argument for the success of your startup.

11. Drafting And Delivery Of the Investment Memorandum

Before drafting the memorandum, seek feedback from mentors, advisors and colleagues. Tailor your pitch to your audience and understand that different investors may prioritize different aspects of your business. When presenting, include a confident verbal or visual presentation in the memo that reinforces your key messages.

Summary

An investment memorandum is more than just a document; it’s a strategic tool that can catalyze your startup’s growth by securing critical funding. By understanding its importance, focusing on the most important parts and avoiding common mistakes, you can create an attractive note that stands out in the eyes of investors. Remember that the goal is to inform, persuade and instil confidence in your vision and your team.

Check out some of our Information Memorandum Templates

7 important agreements for startups

7 Important Agreements For Startups

Establishing a business is a thrilling adventure full of aspirations for expansion and success. However, amidst the excitement, it’s crucial for entrepreneurs to establish a solid legal framework to avoid potential pitfalls down the road. In this guide, we’ll explore seven critical legal agreements for every startups that should be prioritized to prevent costly legal battles in the future.

Contracts for Startups

Following are the important agreements for startups:

important agreements for startups
Important Agreements for Startups

1. Articles Of Incorporation

Often overlooked by eager entrepreneurs, the Articles of Incorporation lay the groundwork for a company’s organizational structure. Choosing the right business entity, such as a C corporation or a limited liability company (LLC), is essential. The decision impacts personal liability, taxes, and overall financial burden. Taking the time to weigh the pros and cons ensures a strong foundation and guards against personal liability risks.

2. Intellectual Property (IP) Assignment Agreement

In the tech-driven landscape, startups must safeguard their intellectual property (IP) to secure development finance. An IP Assignment Agreement is instrumental in establishing ownership of all IP assets, protecting against patent trolls and imitators. Two key contracts, Technology Assignment Agreements and Invention Assignment Agreements, enable startups to acquire pre-existing IP and gain legal rights to works developed post-founding, respectively.

3. Bylaws

Establishing robust rules early on is crucial for the effective operation of a startup. Bylaws outline internal processes, dispute resolution mechanisms, and shareholder obligations. Importantly, they set minimum support levels for significant corporate activities, such as electing board members or taking on debt.

4. Operating Agreement (Founder’s Agreement)

To prevent future conflicts, founders should sign a comprehensive operating agreement outlining ownership of work and establishing communication and conflict resolution procedures. This agreement solidifies the relationship between founders and ensures clarity on each member’s contributions and responsibilities.

5. Non-Disclosure Agreements (NDAs)

Protecting sensitive information is paramount, especially when dealing with third parties. NDAs are essential before engaging in any commercial transactions, ensuring confidentiality regarding closely guarded secrets. The agreement should address when information is classified as confidential, the care taken with it, decision-making authority, the duration of confidentiality, and the maintenance of secrecy.

6. Employee Contracts And Offer Letters

Drafting detailed employment contracts and offer letters is crucial before hiring employees. These documents clarify employment terms, roles and responsibilities, intellectual property rights, and company policies. Clear communication through written materials ensures compliance with legal duties and sets expectations for both parties.

7. Shareholder Agreements

When seeking private financing, a well-drafted shareholder agreement is essential. It defines shareholder rights, governance, the right of first refusal, redemption in case of death or incapacity, and the right to transfer shares. Founders selling shares must comply with state and federal laws to avoid severe fines.

Bonus 

Website Terms of Use Agreement

As startups expand their online presence, a well-crafted Website Terms of Use Agreement becomes indispensable. This agreement regulates the relationship between the company and its clients, covering issues such as website usage restrictions, disclaimers, liability limitations, privacy policy disclosures, copyright warnings, and dispute resolution jurisdiction.

Conclusion

Establishing a startup is an exciting venture, but neglecting the legal foundation can lead to unforeseen challenges. Entrepreneurs must recognize the importance of seeking legal counsel to avoid potential pitfalls. While budget constraints may be a concern, hiring a qualified attorney is an investment that pays off in the long run.

Clear and comprehensive legal agreements not only protect the company but also make it more attractive to investors. A systematic and organized approach to legal matters demonstrates a commitment to professionalism, reducing the risk of legal challenges and allowing the company to focus on growth and development. As the saying goes, “an ounce of prevention is worth a pound of cure,” and in the startup world, these legal agreements are the preventive measures that pave the way for success.

Also Read: Investment Memorandum Guide

FundTQ Helps Fabheads Raise Their Pre-Series A Round

FundTQ served as an exclusive advisor for the deeptech startup, which manufactures carbon fiber parts  and has recently raised INR 8 crore in a pre-series A round from Inflection Point Ventures. FundTQ is the lead sourcing partner of Inflection Point Ventures on this transaction. Existing investors Keiretsu (Chennai chapter) and Vijay Kedia, MD, Kedia Securities also participated in the round.

Fabheads is a renowned company for being the first and only company in India to have developed their patented continuous fiber 3D printing process, a feat only a handful of companies across the world have achieved. Founded in December 2015 by experienced ISRO engineers Dhinesh Kanagaraj, Abhijeet Rathore and Akshay Ballal, Fabheads Automation develops automation equipment to manufacture high-end carbon fiber parts in the country. The startup primarily deals in the Aerospace, Automobile, and Biomedical sectors.

It is also the winner of the National Award for Technology Startups (2021) by the Department of Science and Technology, National Startup Awards (2020) in the 3D Printing Category by Startup India, DRDO’s DaretoDream Award (2019), JEC’s Outstanding Innovation in composites award (2018) and the Top Startup in Manufacturing (2018) by CII.  

Fabheads is offering design and manufacturing services to drones, robotics, and shipping companies in India. It counts E-plane Company, Synergy Marine, Planys Technologies and ADA (Aeronautical Development Agency) as clients. It has also onboarded a couple of Singapore clients and recently started pilot operations across Asia.

“Fabheads is a niche deal, therefore, choosing a right partner for it was of the utmost importance. We believe the partnership and expertise of IPV will assist Fabheads in growing faster and effectively. We believe it’s vital to have right investors onboard, and that too at right valuation” said by Aanchal Malhotra, growth partner of FundTQ

FundTQ is a Digital Funding Assistance Platform for Institutional Investment and Mergers & Acquisitions known as One of its kind fundraising platform with products such as  “Valuation Software” and “Choose right investors platform”.

FundTQ follows a hybrid approach for fundraising and M&A for startup companies through their distinctive technology products, holistic advisory services and their network of firms. Two of their exclusive product offerings include a Proprietary Valuation software available on Subscription basis which allows companies to value their venture in 10 minutes using 15 data points in the most complex and highly data driven manner; and Choose Right Investors platform that helps startups pick and choose right institutional and strategic investors from a pool of 3000+ investors anytime, anywhere in a click of a button.

Close to a 100 startups and mid corporates are currently using FundTQ’s products to raise capital. Founders need to approach fundraising through a filtered process. You start with a large pool of potential investors and trickle down to investors that you feel connected with. FundTQ helps you build that pool of investors and connect with them. Their primary focus is to get you the right investors, at the right valuation, and at the earliest. 

PhonePe set to acquire content and app discovery platform

Company Overview

  • PhonePe is a mobile payment app that allows users to transfer money instantly to anyone by just using their phone number.
  • PhonePe was found in December 2015 and was acquired by Flipkart in 2016. In 2018, Flipkart was acquired by Walmart and PhonePe was also part of the transaction.
  • Flushed with funds after a massive $700 million funding round led by Walmart, PhonePe has been very aggressive with its marketing and acquisition. PhonePe was valued at $5.5 billion, making it the second most valuable fintech after Paytm.
  • In April, it processed 1.19 billion UPI transactions, worth Rs. 2.34 lakh crore, cornering nearly 45% of the market. And with this recent acquisition, it has hit another milestone in the business world.

Acquisition Overview

  • Bengaluru-based India’s leading UPI payment platform, Phonepe is all set to acquire homegrown content and app discovery platform, Indus OS for a deal valued at $60 million.
  • This is believed to be the second acquisition PhonePe has made. In 2018, PhonePe had acquired point-of-sale startup Zopper as well, as part of its aggressive expansion.
  • The rationale behind this acquisition is to boost its ‘super app’, called Switch, designed to offer a wide range of services under one umbrella. The super app aggregates 400 apps across verticals including categories such as food, travel, shopping, and lifestyle which users can access.
  • With this acquisition, PhonePe not only gets Indus OS’ customer base of English-speaking 100 million users, but also plans to expand it for users not having English as their primary language.

Razorpay Raised $160 Million In Series E Funding

Overview

  • Razorpay started with the objective of making online payments accessible to all companies whether big and small. Company offers a fast, affordable and secure way for merchants, schools, ecommerce and other companies to accept and disburse payments online. 
  • With the new funds in hand, Razorpay has a wide range of goals that it has set out to achieve. The company is looking to expand its presence in South East Asian countries, scale up its business banking suite and also invest in acquiring new companies. 
  • The company had recently acquired two startups – Opfin, a payroll and HR Management software company, and Thirdwatch, an Artificial Intelligence (AI) startup. It also plans to hire over 600 employees for the expansion plan. 

Revenue and Valuation

  • Razorpay raised $160 million from Sequoia India and Singapore-based GIC in Series E funding round that has trebled the valuation of the payment gateway startup to $3 billion in less than six months. 
  • Razorpay’s core business is payment gateway Company registered 2.6X jump in its revenues to Rs 509 crore in FY20. While it posted loss of Rs 6.15 crore during the same fiscal, it turned cash flow positive at the operational level during the fiscal. 
  • Now Razorpay has become the 3rd most valued company in the fintech segment after Paytm and PhonePe. 

are we stuck with the same startup business models

Are We Stuck With The Same Startup Business Models?

“Your vision is a story. It is how you revolutionize it, how well you imagine it, how amazingly you narrate it, and how often you innovate it.”

“The strength of the vision of your business model governs who will rule the game or the investors

version of business model

Are You Bringing A Revolution Or Playing A Safe Game?

Are we giving enough to satisfy the appetite of investors? As Myles Munroe, a speaker and an author correctly highlighted a striking difference between self-employed and an entrepreneur. Self-employed are the people working for themselves whereas, entrepreneurs are people who have a long-term vision and goals to achieve that vision.

So are the startups we innovating appropriately? Or are we going overboard with existing startup business models making money. We are experiencing a world with entry of new players in the existing business models itself. Everyone is making the hay while the sun is shining. Indian economy is flourishing with entry of aggregators, and every new business model is based on aggregation of products or services.

To move a step further, there is an aggregator model and then there is a grand-aggregator model (aggregator of aggregators) such as Trivago, aggregator of hotel aggregators and Cabto, aggregator of ride sharing aggregators. Are we awarding the players having the first mover advantage. Those who carried out extensive R&D to build demand, who took the risk in an unknown economy. However, startups really need to rejuvenate themselves to think beyond what is available. Does the business model you are choosing fall within your vision or are they just doing it because the industry is well tested and they can provide a new feature and make it look different? There is a bundle of instances I would highlight here:

bringing a revolution or playing a safe game

And there are many other case studies such as Rigo, Truecabs, Cabby in Ride sharing; Spinny in used-car selling and others.

Are You Prepared Or Are You Just Ready?

As an entrepreneur one needs to keep in mind that is there any problem one is trying to resolve or is one tweaking the loopholes in existing startup business models. We need to empathize with the business models which closed down in their early years of operation. Research shows that nearly 90% of business models fail within their first 5 years of operation.

The major set-backs experienced by business models in the past were by the following:

business model

The reasons stated by most news agencies for failure of business models are failing to innovate, lack of funding, lack of uniqueness, among others. No indian startup ever got shortlisted for Forbes’ 25 most innovative companies or Forbes Top 25 Innovative Growth companies. Why don’t we see rise of meta-level startups such as Google, Linkedin, Facebook, Whatsapp and Twitter.

Entrepreneurs need to think that are they just trying their hands on entrepreneurship or they have a vision and a dream to accomplish.

Investors Herd Mentality And Are We Living In An Investor-Biased World?

The point to ponder here is that all the businesses which failed had atleast one series of funding, which means someone believed in their story? That means if the business models were not unique and innovative, why would an investor invest money at the first place.

As an investor, did you think if you are investing in a business lead by an entrepreneur or a self employed? Are investors fell prey to fancy stories of manipulation and articulation narrated by some of the media companies today which showcase the startups as unique, adventurous while showcasing founders as superheroes.

Fund raising in startups has become a “game of confusion” which needs clarity at the earliest. To do this, thoroughly evaluate the entrepreneur’s vision by asking key questions: Is he ready for the next 10 years? Does he have a diversification plan or is it just a cash burn strategy relying on investors? Does he believe in his story? How prepared is he? Is he putting in the effort to achieve his goal or just burning the midnight oil?

Additionally, there is a slew of new era investors including many individual investors trying to make a buck out of demand-driven startup business models. So, when choosing investors, ask yourself: Is he the right fit? Has he helped his portfolio companies grow or led them to failure? Does he stand by his portfolio companies through thick and thin?

Fundraising: Let’s Clear The Air

Lets reiterate that there are no free lunches and lets learn from the demise of VG Siddhartha. When an entrepreneur raises funding, one is making him vulnerable and accountable to unknown band of investors. It’s a game where you end up diluting to the effect that the investors (strangers to you) take up majority of the stake in your own company. To exemplify this, Jeff Bezoz has 12% stake in Amazon, Flipkart founders had 5% stake, Ola founders have nearly 12% stake in their own company and others.

The flip side of this appears in stories like Uber’s co-founder Travis Kalanick resigning from his own company and Naresh Goyal stepping down and being barred from bidding for Jet Airways, which he founded in 1993. Cofounders of Flipkart resigned / stepped down after Walmart bought controlling stake, among other reasons.There are also other cases, such as Jack Dorsey’s resignation from Twitter and Andrew Mason stepping down from Groupon (now rebranded as nearbuy). In the wake of this, Oyo’s founder declined SoftBank’s offer to infuse USD1.1bn, fearing a loss of control. Therefore, it is of utmost importance to be more learned and mature while raising funds (startups) and providing funds (investors). While concluding this, we can state:

“Nothing can fail your business if you have a vision for next 10 years and you narrate the story of your vision well to those who could believe in you. Just remember business models might fail, dreams donot.”

Also ReadBusiness Continuity Plan

What Is Investment Banking and Skills For Investment Bankers?

What Is Investment Banking and Skills For Investment Bankers?

Investment banking is a core element in helping companies, governments, and institutions with raising capital or providing advisory support through financial transactions. Professionals also need to gather a variety of other banking skills such as financial modeling, market analysis and negotiation expertise in order to successfully pursue this career. They also are important for assessing investments opportunities, supporting mergers and acquisitions and advising clients about strategic directions. This article will shed light on some of the vital roles with required skills for investment bankers and expertise necessary to stand out in this dynamic environment.

You can work as an investment banker provided you have all the essential competencies to be able to negotiate, and do financial modeling and market analysis effectively. These skills help professionals assess investment possibilities, guidance during complex financial transactions, and strategic decision-making. In this essay, we look at the core responsibilities of an investment banker and discuss key skills that one has to hold to prosper in this highly competitive sector.

What is Investment Banking All About?

Practically, it is nothing but representing a company, which requires funds or which is looking out for a strategic partner in front of an investor or buyer. This needs to be aptly strategized as both have strikingly opposite requirements. Financial investor is not much concerned about the business model, he is more focused on the return or yield he would generate when he exits. While strategic investors would be able to dive better as they would focus more on synergies with the target company. 

To become an effective investment banker, you need to know everything about the business model you are trying to sell or get investment in. Every meeting with a potential investor is an opportunity which you gained, therefore research well before you land up in a meeting. Sending a quick teaser before the meeting will make investors more learned and the discussions put forth will be more effective than otherwise. The better and crisp the teaser, the higher would be the potential interest of the investors. It is usually a 5-6 pager impactful presentation covering the USP of the company. There are several online tools available in the market to curate beautiful presentations. Therefore, it is not really important for an investment banker, especially the boutique ones to put in lots of effort in designing a teaser or pitchbook. The tools range from Spark Adobe, Canva, Visme, Zoho, and others.

1. Sharing The Pitchbook: 

Post receiving a positive response, you would be required to send a detailed pitchbook running into 40-50 slides which covers the company evolution, management background, technology details, clientele, peer group positioning (focus here on the vision of the founders), and other details. It is usually been experienced that investment banks create teasers and start circulating widely to all the investors, without focusing on the target investors. Additionally, at that point, the pitchbook is under progress. This is a No-No! It is highly important that as a professional you need to be ready with your pitchbook and financial model. Teaser is a by-product of the pitchbook and not vice versa.

2. Shortlist The Investors Wisely 

So as to save the time and effort. It is critical to duly understand the sector in which an investor is keen to invest. There are several forums to get connected with angel investors such as LetsVenture, Chandigarh Angels, Mumbai Angels Network, and Venture Catalyst, among others.

3. Realistic Financial Model: 

A financial model is not merely an Excel working, it is a platform to set future expectations of investors or buyers apart from diluting a stake. You could include some fancy numbers however everything boils down to how well you negotiate and present your case. 

Requisite Skills For Investment Bankers

Based on the practical experience and survey conducted by 50+ investment bankers, it is analyzed that qualification does not hold water in the current economy vis-a-vis experience. Whether you are a CFA, an MBA, a Graduate, or an IITian. All you should focus is an entry into the first door of an investment bank where you could work on live deals. You might have an impressive personality and confidence, however, it is extremely useful to know how to sell apart from understanding different business models. Following are the skills for investment bankers:

1. Good Drafting Skills

It is effective to use powerful words and frame a story while sending a pitchbook. It is of utmost importance to feel the need of the business model by deep diving into the company and getting all the required information for you to sell effectively. At the end of the day you cannot become an industry expert, however, all you need is to connect to an industry expert, who could further facilitate you in providing the right direction.

2. Build a Good Network And Reputation: 

An added advantage of entry into investment banking is it lets you build an extensive valuable network of investors as well as sector experts globally. Therefore, a tool here is to interact and make informal connections with these people. Let them recognize you as an individual and not as a part of the company. You may do this by sending texts on specific occasions or sending some of your social media articles and the most effective way is to call than text or email (as per research, a phone call is 6 times more effective than an email or text). 

3. Work-Life Balance: 

The flip side of working with top investment banks is a majority of them globally are making their employees work 18 hours every day, which in turn takes a toll on their personal lives.  You may opt to work for a boutique investment banks Vs bigger players.

To conclude the entire article, we have tried to share some effective and implementable tools to adopt in real life in order to crack that entry in an investment bank.

Also read a blog – Guide for Investment banker

7 things to keep in mind for startup valuations

7 Things To Keep In Mind For Startup Valuations

Modern startup valuations often seem like an unsolvable mystery enshrined in gossip and bubble rumors. Startups looking to raise capital need an understanding of how valuations work. Essentially, a value is the amount of money an investor is willing to spend on your total company — but only after parsing it out from a few key components that have a major impact on investor psychology.

In this guide, we will discuss the main parameters underlying startup valuations and provide some of the pitfalls you should avoid in the course of fundraising. The article provides founders the basis to think strategically in pricing: from focusing on business growth factors towards understanding its valuation- which includes EBITDA multiples, comparable deals, or even asset valuations. Whether you are a first-time founder or getting ready to scale, the future success of your startup hinges on understanding the valuation game.

Understanding The Startup Valuations Game

There is a lot of noise around startup valuations. Let us highlight the greater aspects and what to take into consideration while raising funds. The valuation is the amount an investor is willing to pay for your entire business. The valuation will all come down to three broad aspects mentioned below. The aspects are provided indicative weightage as well to make you understand the psychology of an investor:  

It is being rightly said that investor invests in founders and not business models. Along with that, what actually makes the business valuable is mitigating the risk of the business failing in the future. It is hereby surveyed that 95% of the businesses fail in their first two years of incorporation. Therefore, it is extremely important to be mindful of 7 major mistakes to avoid when growing big and getting trapped in the valuation game:

  • Diverting the vision of the business merely for getting investment from big investor
  • Focusing on business than valuation number
  • Keep personal connections with customers; valuation should not impact the core business
  • Developing and streamlining processes and systems
  • Don’t shy away from selling the business even when you reach at the top
  • Reliance on the team too much; remember it is your dream; for employees, it’s a job
  • Diversification in the industry; there are unexplored spaces across the globe to diversify business models

How Do I Value My Startup? 

The major methodology to value the startups

  • EBITDA multiple – In the case of profit-generating companies, an investor applies an EBITDA multiple, usually in the range of 7-10x (depending on the size of the business), and multiplies it by the EBITDA. Additionally, there could also be a multiple of sales / Gross Merchandise Value (GMV) for larger fast-growing businesses. 
  • Comparable Transaction Multiples– An investor might decide to list down all transactions in the near past and compute the multiples in comparable transactions. It is advisable to carry this method for a large set of comparable companies by grouping a wide range of business model.
  • Asset valuation – In the case of capital-intensive business models, investors would like to value the underlying assets. The assets can be a database (for WhatsApp and database collating service business models), and traffic (for knowledge-sharing websites). The scoring shall also be done for the quality of such traffic, active and dormant users, a premium domain name (majorly in the developed countries), a recognizable brand name (social media marketing plays a critical role), and other things that can be leveraged to make higher profits and achieve a faster return on investment for the buyer.

Startups should keep in mind a couple of things while self-evaluating their businesses. Do not boast much of the things which you are not sure about. Analyse and assess in detail the industry size and where would you be positioned post-money in the industry. The best could be achieved, in case you could map the peer group on the scale for competition and USP.