The second factor is liquidity, which means the ease of selling securities. Publicly listed companies at large exchanges possess multiples between 20 and 50, even if they don't grow as fast as hot startups. Meanwhile, selling stock in private companies is quite challenging, so multiples are correspondingly lower.
The multiplicators define a company's cost of capital. The lower they are, the higher stake it has to give away in exchange for the same amount of money. We previously covered it in our article "How asset tokenization brings liquidity to equity crowdfunding
Conditions you offer to investors also influence the multiple. How much power the investors will have over your company and how much guarantees you give them is a third significant factor. For example, if a business consents to provide a high liquidation preference — a guarantee that they will receive at least 2x or 3x return on investment in your company — they can agree to a higher valuation because now, the risk of not getting returns caused by high valuation is reduced.
If you're not acquainted with the notion of liquidation preference yet, read our recent article "The actual benefits of asset tokenization
" on broken economics in venture capital deals and typical clauses in the venture term sheets.