Equidam framework · Standard adaptation
DCF (early-stage adapted)
Equidam's published framework is the cleanest adaptation. The discipline of building a defensible DCF often reveals more about the startup's plan than the resulting number does.
Best for
Startups with at least 18 months of forecastable revenue and a defensible long-term growth story.
Formula
Σ (Cash flow / (1 + r)^t) × Survival probability × (1 - Illiquidity discount)Inputs needed
- Projected free cash flows by year (5-10 year horizon)
- Higher discount rate (30-50% for pre-Series A, 15-25% for later stages)
- Survival probability (often 20-40% for pre-Series A)
- Illiquidity discount (typically 25-35%)
- Terminal value with realistic growth assumption (2-3%, not the founder's TAM dream)
Caveats
- Standard DCF was designed for cash-generating companies — the early-stage adaptation is genuinely approximate
- Survival probability and illiquidity discount can swing the output by 5-10×
- Most useful as a triangulation method, not a standalone primary anchor
Source
↗ https://www.equidam.com/startup-valuation-methods-to-use-and-avoid/Verified 2026-06-03.
Other methods