Equidam framework · Standard adaptation
DCF (early-stage adapted)
Founder takeaway
Founder reading: building a DCF reveals more about your plan than the resulting number. If you can't defend the year-3 revenue projection in a 30-minute meeting, the DCF won't survive due diligence. Use the exercise as a stress test on your own narrative, not as a primary valuation anchor.
Best for
18+ months of forecastable revenue.
Formula
Σ (CF / (1+r)^t) × Survival prob × (1 - Illiquidity discount)Inputs
- Projected cash flows 5-10 years
- Higher discount rate (30-50%)
- Survival probability (20-40%)
- Illiquidity discount (25-35%)
- Terminal value with realistic growth
Caveats
- DCF designed for cash-generating companies
- Survival + illiquidity can swing output 5-10×
- Use as triangulation
Source
↗ https://www.equidam.com/startup-valuation-methods-to-use-and-avoid/Verified 2026-06-03.
Other methods