Fund Raising is an important exercise for any business activity. What are the important parameters to be kept in mind while doing valuation for fund raising?

Fund raising is an important exercise for any business activity. Raising money is a complicated multi-stage process. Valuation of business is one of the most important steps before going for fund raising. A business valuation requires a working knowledge of a variety of factors, and professional judgment and experience. This includes recognizing the purpose of the valuation, the value drivers impacting the subject company, and an understanding of industry, competitive and economic factors, as well as the selection and application of the appropriate valuation approach (es) and method(s). Business valuation is a process that follows a number of key steps. The five steps are: Planning and preparation Analysing the financial statements Choosing the business valuation methods Applying the selected valuation method Reaching the business value conclusion The important parameters to be kept in mind while doing valuation of a business for fund raising are as under: To work out how much money you want to raise. The short answer is that one should raise enough money to get to the next valuation milestone and then have time left to go out and find the next round. The practical thing to do is to put oneself inside the mind of the target venture capitalist and think like the investor. If one can guess how they would value the business then it can be ensured that the amount being raised is consistent with the 10-25% dilution guideline and structure the pitch accordingly.