A 5 year old loss making Startup Valuation

skin zzz (19 Points)

15 November 2021  

hello fellow members

i am considering to study an industrial electronics technology startup company. est. in 2016., based in mumbai.

it's been making losses year after year. i checked their filings of 19-20.

sales of 65lakhs, loss of 91lakh. accumulated losses of 1.81cr on books till march 20.

employee salaries 72lakh, food and beverages 10lakh, travel expenses 22lakh. for year 19-20

total no of shares around 17k.

in august 2020 , ibbi professional based in kolkata has valued this company's share at Rs ~30,000 each.

which values this company at ~50cr.

i fail to understand, how a loss making ,low turnover company is valued at this valuations.

the company doesnt have any fixed assets. have electronics valued at 22lakh and depreciating.

they are looking for investors and want to allot shares on preferential basis at above valuation.

currently, apart from 2 promoters, there are around 12 other investors who invested during last 3-4 years.

could some one please explain whether this is a fraudulent company and how on earth they can get such crazy valuations ?

is it safe to invest in such company at such valuations ? how come they are even able to get 10-12 investors already ?