Valuation Methodology
Definition
The specific analytical approach used to derive a company valuation, which must be selected based on the company's stage, financial profile, and the purpose of the valuation. The FFI Standard recognises five primary valuation methodologies applicable to early-stage companies: discounted cash flow analysis, comparable company analysis, precedent transaction analysis, the venture capital method, and early-stage methods including the Berkus method and the Scorecard method.
Common Misapplication
The most common misapplication is selecting the valuation methodology after reviewing the outputs of multiple approaches and choosing the one that produces the highest implied value. Methodology selection must be based on applicability to the company's stage and financial profile, not on the desired output.
FFI Standard Reference
This term is defined and applied in Book 4, Section 4.1: The Valuation Methodology Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Valuation Methodology. https://ffistandard.org/glossary/valuation-methodology/. 2026.