How would you value a company with no revenue?

Valuing a company with no revenue can be challenging because traditional methods such as using earnings or revenue multiples are not applicable. The most appropriate method in this scenario involves projecting future cash flows and constructing a discounted cash flow model. This approach allows for an estimation of the potential future performance of the company, even if it has yet to generate revenue.

Using a discounted cash flow model provides a framework to assess the company's value based on its expected future cash flows, which, if plausible projections are made, can show the company's potential growth and profitability down the line. This method captures the intrinsic value of the company's operations, considering the time value of money, which is essential when looking at companies in their early stages or in sectors where significant investment precedes revenue generation.

While comparing to similar companies or using book value might provide some context, these methods are less robust than discounted cash flows. They typically rely on market conditions or asset values, which might not reflect the true future potential of a startup or a company in growth mode without current revenues. Applying a multiple to its assets can also fail to capture the value driven by future growth if no current cash flows exist. Therefore, projecting future cash flows and building a DCF model is the most insightful method for valuing a