Talking Business: The Inevitable Question of Startup Valuation

Emmet McGonagle

June 17, 2022

Teruel Carrasco - president of Valhalla Private Capital, co-founder of Radar Endeavour Group Inc and CEO of Lending Assist - has discussed the intricacies of valuing a startup at pre-seed stage.


“There’s a lot of valuation inflation going on, and it's distorting early stage founders' ability to properly value their company,” Teruel began.


With expertise in improving leadership, team-building, business development and overall strategies within startups and established companies alike, Teruel approaches the “inevitable question” of valuation through a range of factors including “ intellectual property, sales, people involved and opportunity”.


“The numbers I hear are all over the place, but there are methodologies to properly state the number,” Teruel said.


Valhalla’s vice president of entrepreneur engagement noted that while some startups are quick to boast $10m valuations, these figures can be industry specific.


On the topic, he explained: “A $10m valuation in a science based company is different than a $10m valuation of a cloud-based app or a cannabis growth company.”


“When putting together a SaaS-based app, for example, the capital requirements to go to market are less than a pharmaceutical company as they don’t need to go through years of rigorous regulatory work such as FDA approvals, testing and trials.”

 

Through contrasting the “vastly different” capital requirements of pharmaceutical companies to the “less capital intensive” requirements of a Saas-based app, Teruel maintains that a $10m valuation on the latter would typically indicate that the company is “making several million dollars in revenue already”, alongside “a good website and a staff of around 10 people”.


“They're growing, and good things are happening within the company,” Teruel continued.


“A $10m valuation of a pharmaceutical company, however, can still be five or six scientists that are still working through the regulatory hurdles for launch,” he concluded.


Teruel also discusses some best practices for pitching to investors within North America’s startup ecosystem.


Do you have a question about angel investing? Get in touch with Valhalla Private Capital via our contact page.

Canadian Unemployment Grows in ‘Labour-Constrained Economy’

By Emmet McGonagle • December 1, 2023
Canada’s unemployment rate has trended higher once again this month, according to the latest iteration of Statistics Canada’s November labour force survey.

Workers Call for Pay Transparency

By Emmet McGonagle • November 29, 2023
More than half of workers believe that disclosing worker compensation details on job postings will lead to better equality in pay, according to the latest iteration of LinkedIn’s Workforce Confidence Index . The index - which is based on a survey of 3,302 members in Canada between June and September 2023 - found that 52% of people asked felt that people sharing their pay information (including salary and bonus) would improve workplace equality, compared to 48% in 2022. This number varies between different generations, with younger Canadians more likely to express support for pay transparency (73%), followed by 69% of Millennials, 46% of Gen X and 44% of Baby Boomers. However, 37% of those surveyed remarked that they felt anxious about sharing their pay information - a 2% rise from the year prior. Likewise, just under half (49%) said they felt well compensated for the work they do while 74% expressed that the pay gap between CEOs and employees had become too wide. The people of LinkedIn have come out in their dozens to give their two cents on the topic, with Adrienne Tom , executive resume writer for executives, saying: “ I'm all for salary transparency, so long as the number is clear and legit. Some postings list salary ranges so wide that the actual salary number isn't entirely clear, leaving job seekers confused.” “If you have a manager who is not advocating for the pay gap, you are working for the wrong manager,” remarked career strategist Sweta Regmi , while noting that women in Ontario earn an average of $0.87 for every dollar earned by men. On the topic, she added: “Salary ranges with job postings can help close the gender pay gap while allowing companies to find qualified candidates more quickly.” Do you have a question about angel investing? Get in touch with Valhalla Private Capital via our contact page .