What’s It Worth?

Every year, Sand Hill Angels invests in number of start-ups. We know how much money we’ve invested (several million dollars a year) and what we’ve received in return (securities of various types). But, we have not, until now, tried to determine what those shares are worth.

Close-up of female hands working at office

One approach is to declare the problem vacuous. Our portfolio consists mostly of companies whose shares will be illiquid for a long time to come. So, whether the shares are (in some theoretical sense) worth one dollar or one million dollars, there is no way to exchange the shares for dollars. And companies that look great often fall apart, companies triumph after appearing all-but-dead, and markets shift quickly.

But, I believe it is important to value these companies precisely because they are so illiquid. Valuation, even if far-from-perfect, provides useful feedback to investors about their portfolios.

So, how can we value a portfolio of illiquid start-ups?

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