The industry selection is an important step for the valuation, as it affects important valuation parameters (e.g. multiple and beta). 

For the industry classification, Equidam uses the Thomson Reuters Business Classification, one of the most widespread and comprehensive. 

The way these industries were constructed is from the point of view of the customer.

When choosing your industry, try to think what your main customers are interested in, and not what the company "does" or what the product "is".

Example 1: Drone delivery

In the case of a company that uses drones for delivering packages, to the extent of this classification, the right industry would be deliveries. Customers are buying the service of getting a product delivered, not the means

Tip #1

To select the right industry (according to this classification) try to think what your ideal customer would search (e.g. on Google) if they did not know about your company

Example 2: Fintech

Despite Fintech being an industry in the latest iteration, it vastly refers to payments. Payments are indeed a service that the customer is interested in. Other fintech companies (investment advice, brokerage of security, mortgages) should look for the specific industry

Tip #2

Try different industries (Q19 of the Questionnaire tab), and test how the valuation changes accordingly 

Tip #3

If you need help with choosing the right industry, please don't hesitate to contact us. We'd be happy to help!