Valuation of Web 2.0 start-ups

When a web 2.0 start-up goes for funding, how does the investor value the current assets and project future growth. Web 2.0 initiatives are still more about belief in revenues to come rather than clearly projectable cash flow. Maybe we need a totally new way of valuating such companies? Maybe the "user" is the dollar of the future and we should valuate companies based on projected "user flow"?
A web 2.0 start-up has a service that they have launched and over time they need to up the infrastructure and actually start paying salaries. This is where funding is needed. If there is already an existing user base to extrapolate on, then we can start modeling. How this translates to money is through marketing dollars and access to users.
Based on the advertisement mix that we can assess what is the marketing value of each user on average. This in turn translates to dollars generated. We also know what is the operating costs and the cost of aquiring a single user.
At the end of the day we are looking at cash flow, but we need to start modeling from a different starting point.

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