valuationRecently, there have been two instances in the Indian startup scene where banks have slashed the valuations of startups.
My doubt it: Why do banks (re-)calculate startups’ valuations?
Is it because some of them invest in the startups, or is there a different reason?
It’s for the same reason that Wall Street banks provides regular coverage for listed companies.
The two banks you that highlighted have a business banking division. That is, you can hire them to provide you with a valuation and an analysis of the company of the company you’d like to invest in. This could mean an investor or more was interested in pouring some money in there. The task could have been commissioned by the company itself, by existing investors, or by future ones.
Further, some investors have reporting requirements. When you manage one or more investment funds, you typically need to report how your portfolio is doing every so often.
Lastly, some companies are popular enough that banks basically provide a regular valuation and analysis on them as a means to bait prospects and establish credibility - much like, say, Hubspot or Intercom provides its potential clients with ebooks.
All content is licensed under CC BY-SA 3.0.