How would you value your business in return of an investment? And when in your opinion is the right time to seek investors?

Ahmed AlSawafiri, Founder, Startup MGZN

The right time to seek investors is when you are extremely clear and confident about your growth plans but your only limitation is money, this is the perfect time to seek investors. Business valuations are highly dependent on the sector you are in, but usually, the main factors which determine the value of the business are a mix of the current financial position, historic growth data, future growth potential, intellectual property, and the overall health of the industry. It’s always a good idea to take professional advice if you are getting into an investment agreement.

Ehsan AlKooheji, General Manager, Kooheji Systems

The value of a company traditionally was the net profit times an agreed multiplier. Recently there has been a shift towards a more emotional valuation, not based on hard numbers, especially in the tech industry. The saying goes: “A business is worth precisely what someone is willing to pay for it – and what you’d be prepared to sell it for.” Personally, I’d consider the financial calculations plus the emotional attachment I have As for investors, the best time is when the company is seeded (if you have a sellable idea), or after it makes steady annual income. But never during growth or uncertainty, as that’s when it has the lowest sell value.”

Eyad Ebrahim, Director, Web Avenue

Realistically, really, you will have to leave passion out of this equation, at least most of it. Investors understand ROI= (Gain from investment-cost of investment) / cost of investment so you don’t want to over valuate your business and drive investors away.

if you don’t have an ace placement team, or a Patent,  you will want to approach investors when your business is profitable and when you have a full understanding of what you need to take the business from point A to point B and how many years it will take you to show your investors return on their investment.

Wafa AlObaidat, Creative Director, Obai & Hill

You should seek investors when looking for capital but also more importantly you should approach partners that can add value to the business you want to start or seek to expand. I personally seek investors who can provide capital, who are passionate about the business, who want to get their hands dirty and get involved with accessing their network and channels to promote the business. I also seek partners that have experience in the field I am looking to start the business in and can mentor and guide me in the process. And I seek investors that have the same values as me and are honest about their intentions.

Yazin Alirhayim, Entrepreneur

Valuations are tricky beasts and those that understand them best confess that they’re more art than science. And you know what: Things get a lot more tricky when the business in question has no track record. With no customers, no revenue and no users, valuations are random, at best. Let’s start from the start: ideas, they’re worthless. Execution is where it’s at. Unless you’ve got paying customers, or a ridiculous number of users.. your business is worth 0.

Approach investors when you need to grow your business, not when you need to start it.

 

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