CA Final · Advanced Financial Management · Startup Finance
A startup, Kaveri Foods, is valued using the Berkus method. The assessor assigns up to ₹50 lakh for each of five factors: sound idea, prototype, quality management team, strategic relationships, and product rollout or sales. Scores awarded: sound idea ₹40 lakh, prototype ₹30 lakh, management team ₹45 lakh, strategic relationships ₹20 lakh, product rollout ₹10 lakh. What is the pre-revenue valuation?
The Berkus method adds the values assigned to each risk-reduction factor. Summing ₹40, ₹30, ₹45, ₹20 and ₹10 lakh gives ₹145 lakh, which is ₹1.45 crore. The maximum possible of ₹2.50 crore is not the assessed value.
- A₹1.45 croreCorrect
- B₹1.25 crore
- C₹2.50 crore
- D₹1.00 crore
Explanation
Sum of the assigned values = 40 + 30 + 45 + 20 + 10 = ₹145 lakh = ₹1.45 crore. The ₹2.50 crore is the maximum possible, not the assessed value.
Did you get it right without looking?
One question tells you little. A timed set on Startup Finance shows your real accuracy, how long you take and where you lose marks.
More Startup Finance questions
- Delhi-based SaaS startup CloudKart has expected free cash flows to the firm of ₹10 crore in Year 1, growing at 30% for the next 2 years (Yea…
- Pune-based startup NimbusPay is valued by a venture investor using the Venture Capital method. Expected net profit in Year 5 is ₹6 crore, an…
- Aarav Foods, a startup, receives a term sheet from a venture fund. Which statement best describes the legal status of a standard term sheet …
- Zesta Foods, a startup, has an expected free cash flow to firm of Rs 10 crore in year 1, growing at 40% in year 2 and 30% in year 3. After y…
- Payzen, a fintech startup, has 80 lakh shares outstanding held by its founders. A venture capital fund agrees to invest Rs 12 crore at a pre…
- A startup with an idea, a founding team and no product wants to raise a very small amount from friends, family and a government-supported in…