STARTUP VALUATION: SHARK TANK PERSPECTIVE

Abstract

The original start-up era can be traced back to the 1980s, when a surge of IT and IT-enabled services transformed a handful of Indian IT businesses into global behemoths, putting India on the global economic map (example, Infosys). The second phase of growth for Indian startups began with the internet era in the late 1990s and early 2000s. A large investment from the government, as well as private investors such as private equity funds or venture capitalists, and other financial institutions, is powering this new era of growth. If the value allocated to every e-commerce operator was based on the Flipkart-Walmart deal, a lot of essential criteria such as performance level, capacity to create cash flow, and ability to attain a bigger size would have been overlooked. - What was the sequence of events for similar businesses? -Is there a comparable firm or transaction that we may use as a benchmark? The majority of start-up valuation discussions take place behind closed doors. As a result, we have little understanding of how entrepreneurs and investors negotiate valuation. To investigate this issue, a content analysis has been done to take advantage of the unique characteristics of ABC's Shark Tank, a prominent business pitch television show being run in various countries with a little audience specific modification. The data implies that entrepreneurs who first offer investors a smaller percentage of their firm are more likely to obtain investment bids. It has also been identified that, rather than the amount of money invested, startup valuation talks tend to focus on the relative equity percentages each party obtains. Finally, while investors are more likely to benefit from negotiations, entrepreneurs who effectively set sharks against one other are more likely to secure conditions that are closer to their initial request. The study provides a detailed methodology for valuing a start-up while also examining topics that are critical to the process: ● Recognizing a start-distinct up's business and asset characteristics ● Examining and comprehending the ecosystem, industry, and sector dynamics in which the company works ● To determine the stage of the company and how it affects its operations and cash flow generation capabilities. ● To calculate the likelihood of success and failure. ● In order to analyse the business, grasping what data is accessible. ● To determine the best appropriate valuation technique or method for the firm