Valuation of a Pre-Revenue Startup: The Case of a Philippine Software Company

Abstract

Purpose - This study aimed to valuate a pre-revenue software startup in the Philippines by applying various valuation tools. Also, it aimed to verify these tools’ advantages and disadvantages in the context of a pre-revenue startup.
 Design/Methodology/Approach - The study employed a case study approach. Valuation methods used were the Venture Capital Method, Chicago Method, Development Milestone Method, and Cayenne Consulting Calculator. In performing these methods, quantitative and qualitative data were used. Such data were mostly provided and validated by the company’s executive management or offices.
 Findings - Based on the comparisons made among the pre-revenue valuation methods, the Chicago Method is determined to be the most recommended method. This method considered various factors relating to where the company is currently, and weighed different scenarios the in which the company could be.
 Research Implications - Further research on possible strategies for the startup’s sustainability and survivability is recommended. Such strategies may include further evaluating and recalibrating operations, and sourcing capital from angel investors.