My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

Finance

The Art and Science of Company Valuations (Infographic)

The Art and Science of Company Valuations (Infographic)
Image credit: Shutterstock
Senior Entrepreneurship Writer at CNBC
1 min read

Instagram, Spotify, Square, Pinterest, and the list goes on: It's starting to seem like billion-dollar startup valuations are a dime a dozen. But how does a young company get a billion-dollar price tag?

The below infographic by San Francisco-based startup organization Funders and Founders details 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, explains Anna 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

 

Click to Enlarge+

How to Jumpstart Your Social-Media Marketing During the Summer Slowdown

 

More from Entrepreneur

Learn to be a better leader and develop successful marketing and branding strategies with Dr. Patti Fletcher's help.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Starting, buying, or growing your small business shouldn’t be hard. Guidant Financial works to make financing easy for current and aspiring small business owners by providing custom funding solutions, financing education, and more.

Latest on Entrepreneur