VC: The Data Science Behind Testing Estimated Valuations

The Data Science Behind Testing Estimated Valuations by Nathan Eyre, PitchBook

At PitchBook, we pride ourselves on having the most accurate and expansive data on the private markets. One key data point that recently sparked some debate was whether or not it was possible to estimate private company valuations. This question became even more pertinent as some industry players have begun incorporating estimated valuations into their datasets.

We decided to test whether or not it was possible by using algorithms from the data science and machine learning community to estimate private company valuations. In this post, I will review in depth the process taken to run the test. For a high-level look at the results, I encourage you to...