Many startup ventures have never generated positive cash flow — or even revenue. How can a valuation analyst value a startup business when it has no track record? Without historical performance to rely on, valuators often turn to the entrepreneurs’ forecasts. However, no one can see into the future. So, prospective financial statements can be subjective and risky, especially in today’s volatile marketplace. Professional skepticism When evaluating prospective financials, valuators must exercise professional judgment and consider making adjustments where necessary. For example, whether or not an entrepreneur has put together formal financial projections can provide insight into the most important determinant of a startup company’s ability to succeed: management. Other important considerations include the startup’s competitive advantage, business type, market size, and potential growth opportunities. Lifecycle of a startup The...