Tech and Digital Assets
A key focus for tech valuations is understanding the business story. The narrative. What is the potential total market value for the industry and what percentage of the market can the business realistically expect to achieve? How long will it take to become stable and profitable? What is the growth curve?
Often tech valuations are required to raise capital and so the question is more about what price can we expect an investor to buy in at. Price is a function of supply and demand, mood, momentum, and appetite in the market. Key tech valuation issues become what price have shareholders invested at before, what is the appetite for investment, are there comparable investments? Importantly how the price and equity interest demanded now can potentially impact the ability to raise capital in the future. The valuation may change as funding level changes: pre-seed, seed and Series A.
Given that tech companies are often growing significantly, to value tech companies Lotus Amity prepares future cash flow estimates. These estimates start with granular detail in relation to revenue, such as the potential number of clients and or market size, potential revenue per client and client churn. Other cash flow analysis includes estimates of future margins, fixed overheads, advertising and capital expenditure.
Experience
Lotus Amity provides valuations for Tech and Digital Assets. Previous valuation engagements have included:
- Valuation of trademarks, domain names and product documents in relation to end-to-end encrypted messaging service application linked to crypto currency. Intellectual valuation report prepared to establish the related party transfer prices for the tax office. Relief-from-royalty and replacement cost methods adopted.
- Valuation of a minority interest in a company developing and providing software platforms in the waste and environmental services sector. Valuation report prepared for the administrators of the estate at the date of death and at the current date.
- Valuation of a tech start-up providing a marketplace for auto services including retail and fleet servicing. Valuation report prepared for the ATO in relation to undertaking a buy-back of Employee Share Scheme Shares and to issue new shares.
- Valuation and financial modeling for a Airbnb style tech start-up related to the commercial property market. Valuation modeling provided to assist in an Angel Investor presentation and capital raising.
- Valuation of a tech-based infrastructure business in the biogas and renewable electricity market. Discounted cash flow valuation models were prepared on various projects to assist in capital raising with incoming investors.