𝗖𝗼𝗺𝗽𝗮𝗻𝘆 𝗩𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 : A process of determining the current worth of a company. This can be done using various methods like comparing with similar companies, analyzing future revenue potential, or looking at assets and liabilities. Let's understand this with a very simple example: The eco-friendly water bottle company is valued at $1 million. The company needs $200,000 to grow, so it asks for this amount from investors. In return, the company offers 20% equity. 𝗶𝗳 𝗮 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 𝗶𝘀 𝘃𝗮𝗹𝘂𝗲𝗱 𝗵𝗶𝗴𝗵𝗲𝗿, 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗺𝗶𝗴𝗵𝘁 𝗴𝗲𝘁 𝗮 𝘀𝗺𝗮𝗹𝗹𝗲𝗿 𝗽𝗲𝗿𝗰𝗲𝗻𝘁𝗮𝗴𝗲 𝗼𝗳 𝗲𝗾𝘂𝗶𝘁𝘆 𝗳𝗼𝗿 𝘁𝗵𝗲 𝘀𝗮𝗺𝗲 𝗮𝗺𝗼𝘂𝗻𝘁 𝗼𝗳 𝗺𝗼𝗻𝗲𝘆 𝗰𝗼𝗺𝗽𝗮𝗿𝗲𝗱 𝘁𝗼 𝗮 𝗹𝗼𝘄𝗲𝗿 𝘃𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻. :
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