Meritt,
ignore DCF's - they are utterly useless in the tech / venture world, especially at the stage you're at. Look at it more as "what value are you providing to the firm" - everyone and their grandmother will claim that its strategic (ergo, justifying high valuations with non basis in financial reality), but very few can pull that off. Failing that is if you can show how valuable you can be to that firm - ie, to use a simple example, if using your approach can provide them with a 5% uplift on their typical sale). Otherwise, its an opportunity cost thing for you - what is your logical upside at a more mature stage, and what is your self-perceived probability of getting there? You don't have to sell, which makes it very powerful.
"Meritt, ignore DCF's - they are utterly useless in the tech / venture world, especially at the stage you're at."
I wouldn't say they're utterly useless. The thing is, they're starting points. DCF isn't the beginning and end of a valuation process; it's a guessy data point. But it's more educated than a lot of other guessy methods. At the very least, it serves to ground the acquiring company's expectations.
I wouldn't rely on a single, straight-line DCF for a startup. Ever. But model out a few scenarios, and play around with a few factors, and you arrive at a sort of distribution of outcomes. That distribution requires an an asterisk, but it isn't useless.
Also, in the event you're being bought by a publicly traded company, somebody there needs to present some sort of NPV-based analysis to someone. If you're a small acquisition, that may be a mid-level manager to the VP level. If you're a big acquisition, that'll be the C-level to the Board (and indirectly, to Wall Street).
