The story changed and hence the value - TVF

Prof. Aswath Damodaran introduced me to valuations back in 2023 before my Articleship, before I knew that such a field exists for CA articles.

Instead of teaching formulas and numbers crunching, he starts with - what is a valuation? Is it an art or science?

And in this he explains the magic of narrative behind every valuation, THE STORY.

Read this (a transcript from one of his videos)

"With young companies, it's all about the story. When I valued Uber in June of 2014, this was a startup, still a young company losing a lot of money. My entire valuation was built around my story about Uber being an urban car service company. That drove my entire valuation.

And when I finished my valuation, Bill Gurley, venture capitalist, leading investor in Uber, said, "You got the story all wrong. Uber is not a car service company. It's a logistics company." Notice how words have consequences. By using the word logistics, what's he done? He's tripled the size of his business. We could be delivery and moving.........My value for Uber was 6 billion. His value was 53 billion. What separated us was the story we told.

With young companies, your story will define your valuation. So if you're a founder, the words you use to describe your business can mean the difference between a 6 billion dollar valuation and a 53 billion dollar valuation."

And you can see this playing everytime you value a company, and more when some make headlines.

TVF (the production house behind Panchayat, Kota Factory, Aspirants, Sapne vs Everyone and many more), I thought of it as one of the most successful production houses built from scratch in last decade, and operationally it might be.

As you can see their logo in every second India's favourite webseries.

But the Valuations?

Dropped to 1/4th of its peak Valuation in 2019

Now people are guessing the reasons behind a significant drop in its valuations despite multiple blockbusters.

But it sums up at fundamental level, the numbers and narrative didn't match. Over the last 2-3 FYs the numbers have started showing maturity stage metrics.

Tiger global, invested in TVF since a decade, might have valued it at multiple of a Technology Company at that time which will have its own TVF play app and D2C business; but eventually TVF became a B2B business supplying content(IP) to other OTT platforms.

The story changed and hence the value.