Valuations: An Art, Not a Science

In any investment firm, venture capital, private equity, angel, or investment banking entities, valuations are a primary indicator that drive informed decision making. “A good valuation is 75% art and 25% science” says Matt Schubring in a recent Forbes article on how valuations are not just a science, but a skill that is continuously tuned. With the Rines Angel Fund and being full-time students in UNH’s Paul College, we are not only learning different valuation methodologies but actively putting them into practice.

In the finance space, there are a number of different valuation theories for analysts to implement when performing due diligence on a firm. A short list of the most common valuations are discounted cash flow (DCF), Comparable Company Analysis, price to earnings, and price to revenue. Before an IPO is launched there are private rounds of funding: Seed, Series A, Series B and so on. The Rines Angel Fund focuses on seed stage investing in companies, a space that adds another set of hurdles to the valuation process.

A startup by definition is an entrepreneurial venture that is focused on growth and delivering a business model around a product that is new to the market. Delving from this statement further and incorporating other startup methodologies, a startup is not always focused on their books, financials, and documentation. In my experience in The Fund, it is common to receive limited financial information from companies, which makes the valuation process difficult. Incorporating these qualitative metrics is key to creating a valuation model, especially within private equity. In public capital markets, analysts have access to all necessary SEC filings, investor relations activities, public interviews, and state of the art platforms, such as the Bloomberg Terminal, to help analyze trends, access data, and visualize catalysts. In private equity, we will utilize all financials given to us by the firm’s executive team; along with research from, and scraping the web for potential micro-interviews with team members. Being in the angel investment domain highlights just how much of an art valuation are. The lack of formalized data forces the analyst to think logically about the team, product, business plan, and market conditions in unison.

An analogy I have picked up from talks with angels, VC’s, investment bankers, and other valuation specialists is this, “I may not know the path, but I know the destination.” Mentors, investors, and a board must be able to see the potential outcome of a particular venture, but will not be the ones executing day-to-day operations of the business.

The Rines Angel Fund has given students a means of performing valued due diligence on companies to assist in raising capital, market research, and analyzing go-to-market strategies. This group provides real world experience to some of the highest caliber students within the Peter T. Paul School of Business and Economics at the University of New Hampshire by creating value for the company, our partnered angel groups, and our members.


Pat Doyle is an alumni member who majored in Information Systems & Business Analytics as well as Finance. He is currently working as an analyst for Elm Grove Companies out of Manchester, NH.



Work Cited

Dahl, Darren. “Why Valuing Your Business Is More Art Than Science.” Forbes, Forbes Magazine, 30 Oct. 2016,