Hmm since I am being a bit of a dick in the post above I will tell you how VCs value the firm assuming it has no revenue.
I am only going to give the highlights because if Gringuito answered that it would immediately tell everyone what exactly he does and that is not cool.
Here is the high level truth.
1. Average people think vc investing is about "numbers". No. That is why shark tank and all the other paparazzi stuff on TV is commercial nonsense (yes some of it goes through)
2. They want to see how passionate you are. I am not joking here this is a legitimate part of the process. If you have minimal revenue but the TAM is $10B+ what the hell do they care? They won't they want to know if your product actually works and if you're willing to ruin your life chasing a dream.
3. VCs are interested in leveraging a position over time! It's like a reverse mortgage, you don't know you're losing that equity value a bitch who sees her looks decline starting at 25. I literally saw his answer to VCs laughed out loud and knew for sure he was not trolling. (A more easy to understand example is think of VCs as activist hedge funds slowly eating up a slice of the equity then yelling down your throat on getting to the valuation and selling/going public).
Now why can't he tell you how he thinks? Here is why.
Each market is extremely specific.
Take a high tech storage company, they run a negative earnings for decades
Take a social media company (whatsapp) how come people invested in that? Similar model losses for decades
Now let's say he runs a software company well margin profile should be high so losses are less time consuming and it makes sense to look at actual multiples because they can be turned to profit quick
Anyway the two points I laid above is really the two items in how vc is different from bullshit you learn in college about "numbers man numbers!"
That is why he won't be able to answer all of those if he rally laid out what he looks at he would be outed right now. This is why I am trying to ask him questions on how he thinks about valuing people notice in my first question he said "that is where he magic is" but then he can't explain his "knack"... Well I will tell you if you can figure out how to mimic his "knack" you'll be richer than everyone reading this forum in 10 years. (Except maybe Gringuito lol!)
---
One of my favorite vc investors once said
"I don't give a fuck about valuations I give a fuck about value"
I am only going to give the highlights because if Gringuito answered that it would immediately tell everyone what exactly he does and that is not cool.
Here is the high level truth.
1. Average people think vc investing is about "numbers". No. That is why shark tank and all the other paparazzi stuff on TV is commercial nonsense (yes some of it goes through)
2. They want to see how passionate you are. I am not joking here this is a legitimate part of the process. If you have minimal revenue but the TAM is $10B+ what the hell do they care? They won't they want to know if your product actually works and if you're willing to ruin your life chasing a dream.
3. VCs are interested in leveraging a position over time! It's like a reverse mortgage, you don't know you're losing that equity value a bitch who sees her looks decline starting at 25. I literally saw his answer to VCs laughed out loud and knew for sure he was not trolling. (A more easy to understand example is think of VCs as activist hedge funds slowly eating up a slice of the equity then yelling down your throat on getting to the valuation and selling/going public).
Now why can't he tell you how he thinks? Here is why.
Each market is extremely specific.
Take a high tech storage company, they run a negative earnings for decades
Take a social media company (whatsapp) how come people invested in that? Similar model losses for decades
Now let's say he runs a software company well margin profile should be high so losses are less time consuming and it makes sense to look at actual multiples because they can be turned to profit quick
Anyway the two points I laid above is really the two items in how vc is different from bullshit you learn in college about "numbers man numbers!"
That is why he won't be able to answer all of those if he rally laid out what he looks at he would be outed right now. This is why I am trying to ask him questions on how he thinks about valuing people notice in my first question he said "that is where he magic is" but then he can't explain his "knack"... Well I will tell you if you can figure out how to mimic his "knack" you'll be richer than everyone reading this forum in 10 years. (Except maybe Gringuito lol!)
---
One of my favorite vc investors once said
"I don't give a fuck about valuations I give a fuck about value"