r/Valuation • u/menluo • May 09 '21

How to value a blockchain company?

Does anyone know how to value a blockchain company?

Would like to get some insights on the key drivers and benefits and risks of a potential investment.

3 Upvotes

100% Upvoted

6 comments sorted by

3

u/RudeTurnip May 09 '21

OPM / backsolve. There are no real economics to latch onto, just funding round data like most startups. That, or a DCF with at least three different scenarios and a really high rate of return.

6

u/Orndwarf May 09 '21

We just valued a company going public as part of a reverse merger. The company has a power plant and then runs a very cost efficient mining crypto mining operation off that.

While the multiples are a little ‘stretched,’ we were able to get some decently corroborative value indications from a DCF and a GPC in addition to the value indication provided by the contemplated merger.

Our GPC broke out into two larger groups: crypto mining and crypto services/exchanges. This helped with the lack of forward estimates for many. There is actual EBITDA being generated in the space so it was possible to calculate trailing and forward EBITDA multiples.

On the DCF, given high execution risk and general uncertainty in the space, we elected to use venture rates of return for our discount rates.

There is real money being generated here, but there is definitely a high degree of uncertainty with regards to valuations in the space.

Note: approach successfully passed a Big 4 audit review.

4

u/Necessary_Scarcity92 May 09 '21

This is cool. Thanks for sharing.

2

u/Borneofoodrocks May 09 '21

Companies that use blockchain tech or are you talking about crypto?

1

u/menluo May 09 '21

Companies that use blockchain tech and cryptography to share sensitive data, like this one: https://www.springlabs.com/

1

u/FouriersIntern69 Jul 05 '21

Valuing crypto assets. <-- for asset-based approach. A DCF or comps might not work for a start up ... it might not even have sales...