and away we go...and valuing a start-up

This morning I had the rare opportunity (hopefully more frequent in 2007) to grab a copy of the NYTimes. And I had the even rarer opportunity to actually read a few articles. The piece by Mark Hulbert "A New Way to Guage a Start-up's Worth", presents an interesting alternative to traditional start-up valuation methods (e.g. industry comps, DCF, revenue/earnings multiples). Of course it would be required to read the book by the Wharton professor cited in the article for coming up with the new method to fully assess the method, but the two core assumptions (revenue growth compared to industry comps and revenue growth compared to industry average post IPO) seem to leave a lot of wiggle room in the method. For a lot of internet start-ups, the definition of "industry" is a real challenge, not to mention the fact that even if a clear industry category is defined, isn't it often the case that only a couple rise to the level that yield an IPO that would serve as the basis for what appears to be much of this valuation method's approach?

Nonetheless, as with any valuation exercise, there's the quantitative and the qualitative...if anything, this method appears to fit on the list of both such valuation categories.