Entrepreneurs and investors struggle to evaluate new ventures. Entrepreneurs are challenged to justify valuation. Investors are challenged to compare diverse investment opportunities and quantify the required return given a particular level of risk. The Right Start Venture Risk Profile℠ helps identify the risk factors most likely to impact a new business venture.
The Right Start Solution: The Venture Risk Profile℠ analyzes new and established organizations across five central risk factors: Team, Customer, Competitor, Technology, and Deal Structure. Each risk factor is evaluated scored on a quantified scale. Given the investor’s risk tolerance and return targets, the Venture Risk Profile℠ calculates the required EBITDA and free cash flow targets for the venture. This allows the investor and entrepreneur to derive the optimal pre-money valuation.
For Entrepreneurs: The Venture Risk Profile℠ identifies high risk areas of the business, allowing the entrepreneur to concentrate efforts on areas where risk reduction most significantly improves pre-money valuation. The mitigation of high risk areas will increase valuation and increase the probability of attracting qualified investors.
For Investors: The Venture Risk Profile℠ normalizes the evaluation of businesses across different stages of their lifecycles and across different industries and business models. This facilitates the comparison of different deals based on their risk-adjusted returns so that capital may be deployed to the opportunities with the highest potential for a significant return.
Please contact us to learn more about Right Start’s Venture Risk Profile℠.