In raising funding, you’ll need to propose a value for the equity in your startup. This is called valuation. One way to determine it is to use the liquidation method.

Here’s how it works.

The exit value is set to the value of the business at liquidation, which means the value of all assets minus liabilities.

Assets include equipment, computers, servers, branding, and data such as customer lists.

Liabilities include debts, cost to let go employees, contracts and leases terminated, and taxes to be paid.

This values the business primarily for physical assets and branding.

It’s possible your computer code or prospect list would be of value as well.

When you sell the business for assets only, it’s often about 10% of what you could have sold it for if it were an ongoing business.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

---

Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org 

Check out our other podcasts here: https://investorconnect.org/ 
For Investors check out: https://tencapital.group/investor-landing/ 
For Startups check out: https://tencapital.group/company-landing/ 
For eGuides check out: https://tencapital.group/education/ 
For upcoming Events, check out https://tencapital.group/events/ 

For Feedback please contact info@tencapital.group  

Music courtesy of Bensound.

Copyright (c) 2024, Hall Martin and investorconnect.org. All rights reserved.

Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.