Valuation is inherently challenging due to the uncertainty and risk associated with startups. Key challenges include:
- Forecasting Accuracy: Predicting future cash flows is difficult, especially for early-stage startups. - Market Comparables: Finding truly comparable companies can be challenging due to differences in business models, market conditions, and growth rates. - Subjectivity: Valuation often involves subjective assumptions, such as growth rates, discount rates, and terminal values.