Explain what the valuation step-up between rounds means.

Question

BlackTom AI · Accepted Answer

Interpreting the question, we’re asked to explain what the valuation step-up between rounds means.
Option 1: 'The post money valuation' — This describes the value of a company after a funding round, including the new cash, but it is not specifically the metric for comparing valuations across rounds. It relates to the immediate implied value after investment, not the ratio between rounds.
Option 2: 'A metric obtained by dividing a company's current valuation by the valuation of its previous round' — This directly defines a valuation step-up as a growth ratio from one round to the next, capturing how much more (or less) the company is valued compared to the prior round. It aligns with the concept of measuring how the valuation has increased from round to round and is the standard way people describe a step-up.
Option 3: 'The change in IRR over the investment' — IRR (internal rate of return) tracks the efficiency of cash flows over time, not the valuation per se. A valuation step-up concerns the company’s valuation multiple between rounds, not the internal rate of return on the investment, so this option conflates two separate metrics.
In summary, the second option accurately captures the idea of a step-up as a ratio comparing current valuation to the valuation in the previous round, while the first pertains to post-money value in a single round and the third to performance metrics unrelated to round-to-round valuation levels.

ENTR6212.30694.202530 Quiz 1

Explain what the valuation step-up between rounds means.

View Explanation

Log in for full answers

Similar Questions

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Which of the following statement regarding cost is correct:

Under the assumptions used in cost-volume-profit analysis, as the activity increases:

The CVP and break-even analysis are supported by a range of important assumptions. Which of the following is not an assumption of the CVP:

The break-even point is that at which:

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler