If the information provided in terms of duration, business model, and team don’t paint a full picture, it may also be worth contextualizing an investment opportunity by looking for similar companies that have been available in the past. These precedent transactions can come from the platform an investment is listed on if it has a track record in funding comparable opportunities. If the platform has limited prior history in the space, you may have to look for similar platforms that have funded comparable opportunities.
After searching for companies that are similar to your target, you can determine the value of the target firm using the comparable firms’ multiples. Relative valuation won’t be perfect because truly identical companies don’t exist, but it will put you on the right track, giving you a good range of valuations to move forward with.
