1. Comparable Company Method Currently in the domestic venture capital (VC) market, the P/E method is a relatively common valuation method.

Generally speaking, there are two types of price-to-earnings ratios of listed companies: historical price-to-earnings ratio (Trailing P/E) - that is, current market value / company's profit in the previous financial year (or profit in the previous 12 months); forward price-to-earnings ratio (ForwardP/E) -

That is, current market capitalization/company’s profit for the current financial year (or profit for the next 12 months).

Investors invest in a company's future and give a current price for the company's future operating capabilities, so they use the P/E method to value: company value = forecasted price-earnings ratio × company's profit in the next 12 months. For companies with income but no

For profitable companies, P/E is meaningless. For example, many start-up companies cannot achieve positive predicted profits for many years, so the P/S method can be used for valuation. The general method is the same as the P/E method.

2. The comparable transaction method selects companies in the same industry as the start-up company that have been invested and acquired during a suitable period before valuation. Based on the pricing basis of financing or M&A transactions as a reference, useful financial or non-financial data can be obtained from them to find some

The corresponding financing price multiplier is used to evaluate the target company.

For example, if Company A has just received financing, and Company B is in the same business field as Company A, and its business scale (such as revenue) is twice that of Company A, then the investor's valuation of Company B should be about twice that of Company A.

.

The comparable transaction method does not analyze market value, but only counts the average premium level of financing merger and acquisition prices of similar companies, and then uses this premium level to calculate the value of the target company.

3. Cash flow discount This is a relatively mature valuation method. By predicting the company's future free cash flow and capital cost, the company's future free cash flow is discounted. The company's value is the present value of future cash flow.

The discount rate is the most effective way to deal with forecast risk because start-up companies have significant uncertainty about their forecasted cash flows and their discount rates are much higher than those of mature companies.

The cost of capital for startups seeking seed funding may range from 50% to 100%, early stage startups to 40% to 60%, and late stage startups to 30% to 50%.

In comparison, companies with more mature operating records have capital costs between 10% and 25%.

This method is more suitable for more mature, late-stage private companies or listed companies.

4. Asset approach The asset approach assumes that a prudent investor will not pay more than the acquisition cost of assets with the same utility as the target company.

For example, CNOOC bid for Unocal and valued the company based on its oil reserves.

This method gives the most realistic figures and is usually based on the money spent to grow the company.

The shortcoming is that the value is assumed to be equal to the funds used, and investors do not take into account all the intangible value associated with the company's operations.