Valuation Discussion Factors In Early Stage Software

Dwight Olson

This article will review factors that help contribute in early stage software valuation discussions. For example, pre-investment money discussions and pre-money scenarios typically center on investors prior investment deals. For example, what equity did they get for what investment. This, in some way, establishes the value of the early stage software and company, but what factors might change this scenario for our future? History has shown that value of early stage software increases as market, technological and financial feasibility factors valorize.1 As LES members, we know that intellectual property and freedom to operate factors also contribute. Monetary forecasting (probability) really begins to take shape when management has obtained the resources or investments to produce and sales of the software product begins. Some of these factors have become so established that the U.S. Federal Accounting Standards Board (FASB) adopted them. These are not monetary or earnings factors, they are factors that reveal the inherent value of early stage technology; here our focus is early stage software.


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