Valuation report of a STARTUP
Ever wondered what your startup is worth?
We here at Settlemytax provide a simple and efficient way to calculate a valuation of your company in literally minutes. Stack the numbers like a venture capitalist, private equity firm or a sophisticated investor to discover what your startup is worth today.
Our valuation methods are calculated from common institutional funding formulas that are employed by some of the largest VC firms and angels worldwide.
Get smarter and get more informed with the most low-cost package of SettlemyTax.
A startup is a buzzing word now! Indians are now willing to try, willing to experiment, and take pride in having their startup. Every successful venture was once a Startup. Social media also has contributed to the success of Startups.
When a Startup plans to raise funds, there are certain compliances to be taken care of under the provision of The Companies Act, 2013 and the recent addition being a requirement of Valuation Report, be it any kind of funding – Seed round, Pre Series funding, Bridge Round, Series funding (1,2,3, A, B, C….), Angel funding, Private Equity, etc.
Valuation Report when required:
Under the Companies Act, while rising funds a Startup has to obtain a Valuation Report by a Registered Valuer (RV) before issuing the following instruments under Private Placement or on a preferential basis.
- Equity Shares
- Partly or Optionally or Compulsory Convertible Preference Shares
- Partly Optionally or Compulsory Convertible Debentures
| Type of Activity | Valuation report form registered valuer under Companies Act 2013 | Valuation report from Merchant Banker | Valuation report from a CA | Our comments |
|---|---|---|---|---|
| Raising of funds through private placement by Issuing Equity Shares/preference shares |
Yes, this is required as per the companies act 2013 | Yes, this is required as per the | Not required | Generally, start-ups take only a report from Registered valuer. |
| Raising of funds by issuing equity shares through rights issue | Not required | Not required | Not required | This is the best way to avoid valuation report expenses |
| Raising of funds through CCD i.e. convertible debentures
|
Not required if the CCD will be converted at the future valuation date.Required if the conversion ratio is already decided when issuing the shares |
Not required for issue.
Required when CCD are converted to equity shares |
Not required | |
| Convertible Notes | Not required at time of issue.
Required when convertible notes are converted into equity shares
|
Not required at time of issue.
Required when convertible notes are converted into equity shares
|
Not required | The start-up should be registered under start-up India scheme and minimum amount to be raised from 1 investor should not be less than 25 lakhs |
Requirements, Time and Cost to get a valuation report from the registered valuer under Companies Act, 2013:
The time required: 6 -7 Days if all the below-required documents are submitted to Settlemytax
Cost: Rs 22999 depending on the method of valuation used
Details required preparing the valuation report required under Companies Act 2013 from a registered valuer
1) Details of any recent funding in comparable companies, if available.(Comparable company might be Indian or global)
2) What are the major risks in the business model of the Company?
3) Financial projections of the Company for 5 years in MS excel-Income statement, balance sheet and cash flow statement.
4) Financial statements of the Company till date
5) Historical audited financial statements of the Company for past 2 financial years.
6) Justification for the major assumptions used in the projections like sales growth, working capital.
7) Details of any prior investment in the company and the valuation report forming the basis of the said investment.
8) Major competitors of the company-Both listed and unlisted.
9) Detailed description of the business model of the Company
10) Term sheet
What information do you need to prepare a Valuation Report?
- Nature of business
- Method to arrive at projections
- Names of similar companies
- Financials till date
- Next 5 years projections