Valuation

What The Hell is Valuation?

Valuation is the price tag the last investor's cheque puts on the whole company Valuation = what one buyer agreed a small slice is worth, multiplied up to 100%.

It is not money in the bank. It is not profit. It is one person's opinion turned into a headline.

A company losing money every single month can still be "worth" ₹200 crore, and most people read that number as cash.

Real World Example & Calculation:
-> A startup has zero profit and burns ₹2 crore a month.
-> An investor puts in ₹20 crore and takes 10% of the company.
-> If 10% costs ₹20 crore, then 100% works out to ₹200 crore.
-> Headline the next morning: startup valued at ₹200 crore.
-> Nobody paid ₹200 crore. One investor paid ₹20 crore and a calculator did the rest.

Now watch it run backwards.

Two years later, the next investor will only pay ₹5 crore for that same 10%.

The company is suddenly "worth" ₹50 crore. Nothing changed inside it that morning.

Only the price one person was willing to pay.

✍🏻 Mantra Joshi

Spotted a wrong number or something out of date? Tell me and I'll fix it.