Valuing an established business typically starts with analyzing historical financial performance. However, most start-ups have never generated positive cash flow (or even revenue), which presents unique challenges. Applying standard valuation approaches without accounting for a start-up’s limited operating history can lead to results that are misleading or unsupportable. So, business valuation professionals tailor their analyses for start-ups’ evolving business models and heightened risk. Prospective financials Without historical performance to rely on, valuators often turn to the entrepreneurs’ forecasts or projections. But no one can see into the future. So, prospective financial statements can be subjective and risky, especially in today’s volatile marketplace. Management’s estimates should be evaluated critically and benchmarked against: Industry data, Market conditions, and Comparable companies at similar stages of development. Valuation analysts pay close attention to the reasonableness of...