There’s a variety of reasons a small business would like to know its value: Maybe they’re looking to sell, prioritizing growth strategies, or courting new investors. Maybe they just want to gauge how they’re performing in the wake of unprecedented disruptions. There is a catch, however: The cost for a professional valuation can be prohibitive, and small businesses may lack the resources to do the calculations on their own.
Enter the Valuation Services Group (VSG), a club led by students from New York University’s Stern School of Business, with a mission to help small businesses know their worth. While not officially yet affiliated with NYU, it is the first known student-led group to provide valuation services to private companies, according to its founders.
“The Valuation Services Group was started to provide these services to businesses for free, using the talent of NYU students who have been thoroughly trained in the area through years of coursework, work experiences, and extracurriculars,” says Hannah Wang, a rising junior at NYU Stern School of Business, as well as a board member and marketing director of the VSG. “Our goal is to break down the barriers to valuation services, while also allowing NYU students to apply their financial modeling and valuation skills to real-world scenarios.”
Poets&Quants for Undergrads sat down with Wang as well as VSG’s president and founder, Dhira Venkatramani, to learn more about the student-led club, its services, and where the club goes from here.
To start, Dhira, tell us a bit about yourself and where the idea for the Valuation Services Group came from.
Dhira: I am currently a rising senior, going into my fourth year at NYU Stern, studying finance and social entrepreneurship. I’m originally from Ohio, and I guess that kind of leads into why I wanted to start this group.
I started VSG in 2019. It was kind of an idea I had well before even starting college because I grew up in a small entrepreneurial, family business environment. I learned how different resources can be very useful to small businesses, but also very difficult to access.
Valuations specifically can be very helpful for a business to understand how well they’re performing, ways that they can grow in the future, or if they need it to use while pitching to investors or raising capital. But going to an outside professional firm to get a valuation done can be very expensive, and a lot of times small businesses don’t have the resources to do it on their own. So for me, going into business school, I figured there must be tons of students here who are already well versed in valuation through different coursework and internships or they’re interested in being trained and learning more, and they can provide these types of services to businesses, just like my parents business, for free. Ultimately, I wanted to start this group to help break down these barriers and empower small businesses through different financial resources like valuation while helping NYU students apply what they’ve been learning in a real world setting.
What was your family’s business?
Dhira: We live in Dayton, Ohio, where manufacturing is a large industry. My parents started a manufacturing business after they immigrated from India, and they do a lot of servicing on different types of machinery and also a little bit of aerospace.
Hannah, how did you get involved in the club?
Hannah: I’m currently a rising junior, and I found out about the club through social media. I thought the whole concept was really interesting. At this point, I had only had one internship experience where I worked at the National Development Council on processing loans and grants for small businesses that were negatively impacted by the pandemic. Seeing these two missions aligned was really fascinating for me. Although I’m not concentrating in social entrepreneurship, I was part of Social Impact Fellows my freshman year. I am interested in the intersection between business and social impact, so I applied to the club and I am currently its marketing director.
How many NYU students are currently in the club?
Dhira: In terms of who on our team is actually working on reaching out to clients and working with them in the upcoming semester, we’ll have around 13 students. We also have a general membership of close to 100 students who are just interested in coming to our events for training on valuation and just keeping up with what we’re doing.
How many businesses have you worked with so far?
Dhira: We’ve completely finished the process with around five businesses, but we’re also in the process with several others right now and actively working with multiple businesses at the same time.
Briefly walk us through the process of working with these small businesses.
Dhira: We have specific members of our team who are focused on outreach right now, so usually when we hear that a client is interested, it’s usually because one of our members of our team have reached out to them saying, “Here’s who we are, here’s what we do, and here’s why a valuation might be useful to you.” If they’re interested, they then fill out our client application. Then we set up an introduction call.
That first call is where we start to learn more about them. What is their business model? What do they do? Why are they interested in a valuation? From there, we sign an NDA, and we start gathering the information that we need: Usually financial information from the business, however they’d like to get it to us. Sometimes they just send their statements to us over email. Sometimes they want to have us walk them through it live and gather the information that we need. Then, it’s kind of up to our valuation team to go through all the numbers and come up with a result: What is the value of this business?
Within, really, one to two weeks, we can really knock out the a valuation and present the results to them: What we think this means for them in the future, our recommendations, that sort of thing. But we’re also happy to stay in touch with the client if there’s anything else we can help with or if they want to be referred to other resources at NYU.
What kind of feedback have you gotten from the clients so far?
Dhira: One of the most interesting and rewarding parts of this experience is hearing the feedback and why exactly the client wanted a valuation in the first place. We’ve had a lot of different scenarios. We’ve had some clients with a specific setup in how their investors are getting shares out of their company, so they need a new valuation to reallocate their shares and having a number in hand is extremely useful. We’ve also had others who were hit really hard by COVID and were doing a full rebrand and shifting of their business model. They’re talking to us about getting a valuation now, and then hopefully later getting another valuation when things improve to see, more specifically, how things have improved with that rebrand.
Other businesses just want to see if they can create more efficiencies in terms of expenses. We’ve also had a business who approached us saying, “Look. I just had an idea for a business. I do not have any financial experience, and I don’t come from a business background. I’ve heard this term valuation thrown around as I’ve started thinking about fundraising, but I don’t really know what it means, so I’m here to learn from you.” So, that I think, was probably the most rewarding and heartwarming experience for me because, at the end of the day, this is our target audience. This is why I started VSG.
So, we’re going through the process with these different businesses, and we’re at all different stages with each of them right now, but just hearing the feedback we’re getting from them is encouraging. They are thankful and tell us that without it, they wouldn’t have known anything about valuation or how their business is doing financially.
Hannah, describe your role with VSG.
Hannah: My role is in marketing and PR, so I don’t interact with the clients directly. I am focused on branding our image and the content that we post to interest potential clients.
What are you studying at NYU?
Hannah: I’m double concentrating in finance and marketing and minoring in digital art and design. I wanted to do the marketing side (of the club) because it was something that was potentially interesting to me. At my internship, I was doing mostly finance heavy work, and I was curious to see what it’d be like on the marketing side as well.
What is the target type of business for your club’s service?
Dhira: Right now, at least, we branded ourselves as focusing on companies in the New York City area. We are open, definitely, to businesses interested from other areas because we’re able to do our work virtually. I think we’re in a really unique position as well, being at NYU and being in New York City which has more businesses than any other city in the country. We also are fortunate to have access to world renowned experts in the field at NYU.
We’re also focusing on smaller businesses, but at the end of the day, we usually aren’t going to say “no.” We want to help. So we’re kind of open to anything right now.
What other things does the club do?
Hannah: We have about 100 general members, people who are just interested in learning more about valuation or any of the services that we’re providing. I think it’s pretty cool that this club not only helps New York City businesses, but also gives back to the NYU community by providing resources for students to learn if they want to. I think another interesting thing about this club is Dhira and I are both from Stern, but VSG is open to anyone from NYU. As long as you have a genuine interest in what we’re doing, we won’t turn you away.
What are your hopes for the club moving forward, and after you graduate?
Dhira: We’ve been able to do a lot of work together as a student run group, but we’re still in a lot of conversations with different programs and departments of the university about how to officially house our program at NYU. We’re still in talks with the NYU club system, a few different academic departments and professors at Stern, as well as the Stern Center for Sustainable Business. They’re all kind of interested in talking more to see how we can collaborate and maybe officially join one of those. That’s really my hope for this. I hope before I graduate, I can see this become an official part of the university somewhere and to know that things will continue to sustain over time and grow.
Anything else you’d like to add?
Hannah: The only other thing is, when talking about the future, I just hope that through media reports about our club we can widen our outreach to people. I think initially, a lot of small businesses had hesitancy about showing us their financials and other details that were more personal, which is totally understandable. But as we grow and we have more businesses that we work with, I think it will help us a lot in terms of reaching more and more people.