Last updated: Abril 2026
Valuation Methods for Startups and Private Companies
Valuing startups and private companies is fundamentally different from valuing publicly listed companies. Without daily market prices, limited audited financial data, and often no revenue history, traditional methods need to be adapted — or replaced by specific approaches. This guide covers the most widely used methods by venture capital investors, private equity firms, and independent analysts to estimate the value of unlisted companies.
Most used methods for startup valuation
Early-stage startups (pre-revenue or with nascent revenue) lack stable cash flows for a traditional DCF. The most common methods are: (1) VC (Venture Capital) Method — estimates future exit value (IPO or M&A) and discounts back by the investor's expected return rate; (2) Round comparables — uses multiples from similar startups that recently received investment (e.g., X times annual recurring revenue); (3) Scorecard — compares the startup against sector benchmarks on criteria like team, market, product, and traction, adjusting the average valuation of similar startups.
Most used methods for private company valuation
Mature private companies (with revenue, profit, and financial history) can be valued using more traditional methods, adapted for the absence of market data: (1) Adapted DCF — projects future cash flows with an illiquidity premium (20-30% discount vs. comparable listed companies); (2) Private transaction multiples — uses M&A multiples (EV/EBITDA, EV/Revenue) from recent sector transactions; (3) Asset-based valuation — sums the fair value of assets minus liabilities, common for companies with significant tangible assets (real estate, holding companies).
Method comparison by company type
The right method depends on the company's stage and characteristics. The table below summarizes the most suitable options for each scenario.
| Method | Best for | Complexity | Data needed |
|---|---|---|---|
| VC (Venture Capital) Method | Early-stage startups, Seed/Series A rounds | Medium | Exit projection, market comparables |
| Round comparables | Startups with recurring revenue (SaaS, subscription) | Low | Multiples from recent sector rounds |
| Adapted DCF (with illiquidity premium) | Mature private companies with financial history | High | IS, CFS, Balance Sheet, adjusted WACC |
| Transaction multiples (M&A) | Private companies in sectors with active M&A | Medium | EV/EBITDA, EV/Revenue from recent deals |
| Asset-based valuation | Holdings, real estate companies, asset-heavy firms | Low to Medium | Updated balance sheet |
Differences between valuing listed and private companies
The main difference is information availability. Listed companies publish audited quarterly financial statements, have daily market prices, and are tracked by dozens of analysts. Private companies depend on information provided by their own partners, are rarely audited, and have no daily price reference. This requires two adjustments: (1) illiquidity premium in DCF (20-30% discount on value) and (2) use of private transaction multiples instead of market multiples. For B3-listed companies, Valoro automates the entire valuation process with pre-loaded data.
Common mistakes in startup and private company valuation
The most frequent errors include: (1) using listed company multiples without applying an illiquidity discount; (2) projecting unrealistic growth based solely on TAM (total addressable market) without considering execution capacity; (3) ignoring future dilution in startups that will need additional funding rounds; (4) not considering liquidation preference clauses that alter value distribution among shareholders; (5) valuing pre-revenue companies with methods that require financial history, such as unadapted DCF.
Frequently asked questions
Can I use DCF to value a startup?^
It depends on the stage. For pre-revenue startups, traditional DCF doesn't work because there are no historical cash flows to project. For startups with recurring revenue and predictable growth (Series B onwards), an adapted DCF with a risk premium is viable.
What is an illiquidity premium?^
It's a discount applied to private company valuations to reflect the difficulty of selling the stake. Since there's no active secondary market (like a stock exchange), the investor demands higher returns, which reduces present value. Typical discounts range from 20% to 30%.
How can Valoro help with private companies?^
Valoro was designed for valuation of B3-listed companies, with pre-loaded data and automated DCF calculation. For private companies, the DCF and multiples concepts are the same — the difference is in the data source, which needs to be entered manually.
Which method is most used by venture capital funds?^
The VC (Venture Capital) method is the most common in early-stage rounds. It estimates the startup's exit value (IPO or M&A) and discounts to present by the fund's expected return rate, typically between 30% and 60% per year.
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