...especially when there is no previous outside investment?
when a company is being acquired more for its technology than its user-base?
How are valuations determined?
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Re: How are valuations determined?
#2to clarify: valuation for acquisition, not for funding
Re: How are valuations determined?
#3Lots of ways. If it's just technology, things like having (blocking) patents will prove value. Does the technology work, or is it in a prototype form? How much money would it take to turn it into a product (through either more development or integration). How big is the market the technology competes in? How established is the market? How much of it can this technology theoretically grab, and how long would it take to do so?
Can it (should it) be licensed? Does it make other technologies more, or less, valuable/usable/sticky?
Basically it will probably come down to figuring out if it's faster or easier to build or buy the technology you own. Blocking patents make your tech more valuable, as does a rapidly maturing market.
It's definitely not something like every line of code is worth $1. Or if you put $xM into development then it is worth some direct multiple, or fraction, of $xM
Re: How are valuations determined?
#4i can think of a few websites that could realistically be acquired for $1M-20M in today's environment. it's a crazy time.