Abstract
The aim of this conceptual article is to present a systematic literature review about the most used and innovative startup valuation methods to define the state of art and future trends on this important topic.
 
 Because of the particular features of early-stage companies, it is not easy to find an adequate method to assess their value. Traditional valuation methods are unsuitable for startups. Therefore, over time, academic literature and experienced investors created alternative and innovative valuation models. We analysed the main models, outlining the advantages and limits for each one.
 
 The results of our analysis show that there is currently no "perfect" method to assess a startup’s value. Each model discussed has significant limits, and the possibilities for improvement are many. We are witnessing a gradual withdrawal from more arbitrary valuation models, and consciousness is growing towards the idea that to better assess startup’s value, it is necessary to consider three aspects: attention to future forecasts instead of past data, using probability to consider different scenarios, and understanding of and attention to the specific business model of the startup rather than data on comparable companies in the market. Currently, none of the discussed methods integrates these three features harmoniously.
 
 We expect that in the near future, the academic literature will develop new valuation methods (or will perfect existing ones) that should consider the three characteristics mentioned previously. In this way, it would be possible to create a more suitable method to assess a startup's value, i.e., a method to reduce uncertainty and that better represents the startup’s value and makes startup company valuation more reliable.
Highlights
We have to define a startup company
The aim of this conceptual article is to present a systematic literature review about the most used and innovative startup valuation methods to define the state of art and future trends on this important topic
We considered refereed academic papers, books, research reports, conference proceedings and practitioner-oriented contributions from professional journals written in English without a time restriction
Summary
We have to define a startup company. Birley & Westhead (1994) defined startups as small, new, independent businesses established by individuals to be self-employed. Other authors (Granlund et al, 2005) developed a startup definition considering fast growth or already fast-growing firms that operate in information and communications technology businesses and the biotech (life sciences) industry ( called New Economy Firms, NEF). David & Foster (2005) considered a startup to be a company with these characteristics: (1) minimum of 50 and maximum of 150 employees, (2) less than ten years old, (3) independent, and (4) in a limited geographic area. For Kollmann et al (2016), startup companies must have three features: be younger than 10 years old, have highly innovative technologies and/or business models and have (or strive for) significant employee and/or sales growth. Summarizing, there are different definitions of startups, we can say that a basic and commonly acceptable definition of startup was given by Kolvereid & Isaksen (2006): ―new businesses which are started from scratch‖
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