Why arriving at a mutually-acceptable valuation with an investor, is often trickier than anticipated?

I think this is the prime reason why investors and entrepreneurs find it difficult in cracking the deal, as valuation methodologies can differ depending on the stage of investment and the availability of quantitative and qualitative data. Both investors and entrepreneurs have limited information available on other start-ups that they can compare with, as well as very few industry benchmarks to refer to. Industry watchers say this gap in credible data is one of the factors for the divide between the Indian entrepreneur and venture capitalists.

Investors believe aspiring entrepreneurs should be better prepared to hard-sell their ideas and companies to gain a fair valuation. In order to maximise the valuation of a start-up, entrepreneurs need to have a solid vision statement as well as a strong management focus. Also it is important to remember that for an investor, the return on investment is crucial.

A budding entrepreneur has to convince an investor about the potential of his venture, how big it can become over the next five or six years, thereby maximising his return. The investor can’t leave thinking of the possibility that growth might happen eventually.

Even if the business plan has the best business potenital and great commercial viablity, its execution risk is difficult to get captured by entreprenuer or and Investor. With all its passion and 100% confidence of entreprenuer, executional risk is always been Very BIG question mark on valuation expected by entreprenuers. Valuation is always been perceived from the Investors degree of comfort for its understanding of executional risk, once he is confident of business commercial valution. 

 Try give out as much as possible a true picture. Conceptual idea's very clear, operations modus operendi undisputable. Market analysis today & predicted for the near future, Risk involved, particularly, political upheaval/ employee strikes/resource going unavailable/Transportation cost & overhead etc. Convince the Investor all his doubts & make him Confidant in investment.

Evaluation needs to take into account of all possible future trend such as the product market, consumers characterics, money value & human resource availability, Govt regulations ( sometime levy heavy etc.).

Better highlight, earlier trend in such industry with the present one.

I feel VC's pay higher value for emerging technologies, which is bound to click in shortest period of time. For technologies that already exist they will provide less because the competition for supplying the product can diminish the cashflow.