Metrics & Performance
Enterprise Value (EV)
Last updated
Quick Answer
A company's total value including equity, debt, and cash — a more comprehensive measure than market capitalization alone.
What it is
Enterprise value is calculated as market cap + total debt - cash and equivalents. It represents what it would cost to acquire the entire business. EV is used in valuation ratios like EV/Revenue and EV/EBITDA that are more comparable across companies than price-based ratios.
In Practice
A startup with a $500M post-money valuation, $50M in venture debt, and $80M cash has an enterprise value of $470M ($500M + $50M - $80M).
Operational context
What good looks like
The term is tied to a real workflow, not just a definition.
Ownership, timing, and evidence are clear.
The reader can tell what decision the concept supports.
Related terms point to the next useful explanation.
Why It Matters
Enterprise value provides a more accurate picture of a company's worth than equity value alone, especially for companies with significant debt or large cash reserves.
VC Beast Take
Enterprise value is the sticker price of the whole business. Market cap is what you'd pay for just the equity. The difference matters more than most founders realize.
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Term Family
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Comparisons
Frequently Asked Questions
What is Enterprise Value (EV) in venture capital?
Enterprise value is calculated as market cap + total debt - cash and equivalents. It represents what it would cost to acquire the entire business. EV is used in valuation ratios like EV/Revenue and EV/EBITDA that are more comparable across companies than price-based ratios.
Why is Enterprise Value (EV) important for startups?
Understanding Enterprise Value (EV) is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
What category does Enterprise Value (EV) fall under in VC?
Enterprise Value (EV) falls under the metrics category in venture capital. This area covers concepts related to the quantitative measures used to evaluate fund and company performance.
Sources & References
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