The Art and Science of Company Valuations (Infographic)See a visual explanation of how young companies are valued, in some cases before they're even making money.
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Instagram, Spotify, Square, Pinterest, and the list goes on: It's starting to seem likebillion-dollar startup valuationsare a dime a dozen. But how does a young company get a billion-dollar price tag?
The below infographic by San Francisco-based startup organizationFunders and Foundersdetails how a startup is typically valued. A valuation is simply an estimated value of a company and is often based on assumptions about a startup's potential. It's not an exact science, explainsAnna Vital, the author of the infographic in a blog post. A company's valuation is important because it can determine the percentage of the company that should be given to an investor in exchange for cash, Vital says.
Related:How Instagram Went From Idea to $1 Billion in Less Than Two Years
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