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How to do Startup Valuation for Startup Companies in India

In this articles we will share the Startup Valuation Method that is mostly used by Venture Capitalist and Angel Investors for valuing Startups.  Startups are valued with different methods and approaches, this all depends on products, users, technology and revenue models. 

Here Investor invests to earn return of their equity and they risk high on startups because early stage startups have no business experience, no established brand of their products and services, No Human Resources, illiquid Investments etc. The Future of Startups are uncertain, so valuing a startup can be little bit tricky.

Here we will discuss startup valuation at pre-revenue stage or revenue generation just commenced and gradually being scaled up.

Minimum Requirements for Startup Valuation and Stake Diversion – Procedure 

Expected Investment by Venture Capitalist or Angel Investor :

For Example are you an startup Founder and have recently get connected with Venture Capitalist or Angel Investor, He wants to I invest Rs. 100 lakhs in your startup, so How much Company Stake are you willing to divert to get Rs. 100 lakh into your business. We will find this out at later stage. 

Expected Profits by Startup Company will earn 

It is Important to know that what products or services startup entity have , how much it will earn in next year. We need to do some maths and got that company will earn profits of Rs. 300 Lakhs on fifth year. 

Expected Return on Equity Investor expects from Startup entity 

There is certain percentage return that Investor expects to earn from its Investment  , say Investor wants to earn 20% return on Investment per year, 25% return on Investment per year. 

The required Future Value of Investment = 100*(1.20) for 5th Year 

if you calculate the Future Value this Comes out at = 248.83 at 20% and 305.18 at 25% 

Valuation of Company at this time

5th Year Net Profit * PE Multiple 

300*8 = 2400 Lakhs 

How much Company Stake to be diverted 

248.83/2400*100 = 10.36% stake

Fastlegal Provides Valuation Services for Startup Entities though IBBI  registered Valuers, Email us your Requirements at [email protected]

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List of Incubators in India to Obtain Recommendation with Regard to Innovative Nature of Business

For Registration of an Entity under Startup India  recommendation letter is required to be attached while submitting the registration form , this nature of recommendation with regard to startup may be obtained from any incubator established in post-graduate college in India.

Following are the incubators from which recommendation letter can be obtained with regard to innovative nature of business :

  1. Association for Innovation Development of Entrepreneurship in Agriculture (AIDEA)
  2. IKP Knowledge Park – Life Science Incubator (www.ikpknowledgepark.com)
  3. Agri Business Incubator (http://www.agrisciencepark.icrisat.com)
  4. Technology Business Incubator – UOH (www.uohyd.ernet.in)
  5. International Institute of Information Technology (IIIT – H)
  6. Birla Institute of technology and Science, BITS- Pilani (Hyderabad Campus)
  7. Technology Base Incubator Society (TBIS) (udsctbi.org
  8. Shriram Institute for Industrial Research (A Unit of Shriram Scientific and Industrial Research Foundation) (www.shriraminstitu te.org)
  9. IAN Mentoring and Incubation Services (www.IndianAngel Network.com/incubator)
  10. National Design Business Incubator (NDBI) (http://www.ndbiindi a.org)
  11. CIIIE Initiatives, Centre for Innovation, Incubation and Entrepreneurship (CIIE) (www.ciieindia.org)
  12. Comcubator (www.micaedc.org)
  13. Gujarat Foundation for Entrepreneurial Excellence (GFEE – iCreate)
  14. Venture Studio: Center for Innovative Business Design
  15. Centre for Incubation and Business Acceleration (CIBA)
  16. Society for Innovation and Entrepreneurship in Dairying (www.ndritbi.com)
  17. Shri Mata Vaishno Devi University Technology Business Incubation Center Society (SMVDU TBIC)
  18. TBI – International Centre for Innovation, Technology Transfer and Entrepreneurship (IN-CITE)
  19. Composites Technology Park (www.compositeste chnologypark.com)
  20. E-Health TBI (www.ehealthtbi.co m)
  21. Manipal University Technology Business Incubator (www.mutbimanipal .org)
  22. Technovate
  23. Global Incubation Services (GINSERV) (www.ginserv.in)
  24. National Design Business Incubator (www.ndbiindia.org /www.nid.edu)
  25. Startup Village (startupvillage.in)
  26. TBI (http://nitc.ac.in/nitc /misc/tbi/public_ht ml/index.htm)
  27. Technopark TBI (www.technopark.o rg)
  28. Amrita TBI (www.amritatbi.co m)
  29. College of Engineering, Trivandrum
  30. Amal-Jyothi Rural Technologies Business Incubator (amaljyothi.ac.in)
  31. National Centre for Aerospace Innovation and Research (NCAIR) (www.ncair.in)
  32. Society for Innovation and Entrepreneurship (SINE) (www.sineiitb.org)
  33. MITCON Biotechnology Business Incubation Centre (A Division of MITCON Consultancy Services Ltd.) (www.mitcoinindia. com)
  34. Venture Center (venturecentre.co.i n)
  35. D.K.T.E. Society’s Textile & Engineering Institute
  36. BIL-Ryerson Futures (Zone Startups)(www.zonestartups .com)
  37. KIIT – Technology Business Incubator (www.kiitincubator.i n)
  38. TBI (www.discovery.bit s-pilani.ac.in/tbi/)
  39. Startup Oasis Incubation Center (www.startupoasis.i n)
  40. Sathyabama University – Technology Business Incubator (SU-TBI)
  41. Coimbatore Innovation and Business Incubator (CIBI) (www.kctbs.ac.in)
  42. Nanotechnology Research, Innovation Incubation Centre (psgtech.edu)
  43. TCE-TBI Thiagarajar College of Engineering
  44. IITM – Incubation Cell (http://incubation.iit m.ac.in)
  45. TBI (www.tbi-kec.org)
  46.  VIT- Technology Business Incubator (http://www.vittbi.co m/)
  47. Technology Business Incubator Centre for Biotechnology (www.annauniv.ed)
  48. UOM-TBI (www.unom.ac.in/ta ramanitbi.html)
  49. IITM`s Rural Technology and Business Incubator (RTBI) (www.rtbi.in)
  50. BIT-TBI, Sathyamangalam ([email protected] om www.bittbi.com)
  51. Periyar Technology Business Incubator ([email protected] www.periayrtbi.org)
  52. SPEC-TBI (www.spectbi.com)
  53. Vel Tech – Technology Incubator
  54. Agri- Business Development- Tamil Nadu Agricultural University
  55. Adhiyamaan College of Engineering
  56. Villgro Innovations Foundation
  57. Information Technology Business Incubator( ITBI), JSSATE- STEP (http://www.jssstep noida.ord/incubator .as)
  58. Amity Technology Incubator (http://www.amity.e du/aii)
  59. TBI – Krishnapath Incubation Society([email protected], www.tbikiet.com)
  60. SIDBI Innovation and Incubation Centre (SIIC) (www.iitk.ac.in/siic)
  61. Malviya Centre for Innovation Incubation & Entrepreneurship  (www.mciie.org)
  62. TBI- Graphic Era University
  63. IIM Calcutta Innovation Park (IIP)
  64. Shibpur- TBI
  65. Ekta Incubation Centre (www.technologye mbryo.com)
  66. WBUT
  67. Technology Incubation and Entrepreneurship Society ( TIETS) (www.stepiitkgp.in)

Full List along with address and contact details can be downloaded from Startup_India_List_of_Incubators