**3. Discussion**

The analysis of the life cycle of a business is the starting point for determining the projection of profits and cash flows, which are the basis for the valuation of companies. The construction of the life cycle of a startup makes it necessary to introduce a development stage prior to the introduction stage where sales begin, the reason is that these companies involve extensive periods of product development where investments must be made without still starting the commercial stage of the company.

The life cycle of a business represents the projection of sales of the company's products, in the development stage investments are concentrated to obtain a minimum viable product and then the expectation of initial sales of the product is represented describing the stage of introduction. Subsequently, the stage of expected sales growth is built and the projection ends with the configuration of the maturity stage, where the business is expected to grow at a slower rate until it has a growth rate close to zero.

This projection of sales multiplied by their respective prices allows the construction of business income, and these in turn the evolution of costs (semi-fixed and variable), of investments in fixed assets and working capital. With the information described, the projected Income Statements and the economic flows of the business can be prepared. Thus, the necessary information will be available to apply the methodologies to value the startup, by the net profit method or by the discounted cash flow method.

Properly constructing projections makes it possible to identify the necessary investment amounts, estimated investment times, and expected economic flows. These components make it possible to determine in advance the profitability of an investment and the value of a company. Although the projections made in the early stages are expected and possibly differ from the real ones, it allows modeling the behavior of the business that the investor will take as a basis to adjust his expectations of remuneration for his investment.

The development of the life cycle also allows the separation of two important phases of a business where two expectations of expected return -or discount rates- will be applied to value a business. On the one hand, the business incubation phase, which includes the development stage and the introduction stage. On the other hand, the consolidation phase, where the startup is expected to position itself in the market. Likewise, the cost of capital or expected return in the business incubation phase will be significantly higher, as it reflects the risk that, at this stage, the startup will not be able to position itself in the market. After this stage, the expected capital costs may coincide with the expected returns of a similar business in the market.

The life cycle is not the same for all businesses or startups, as it depends on their nature. For example, companies that invest in disruptive innovation products will have a longer development stage with longer and more intensive investment periods, but with the expectation that they will obtain significant growth once they are consolidated. This is different in startups that innovate specific industry processes, since their development stages are shorter, they have a known market, but also more limited since they are based on existing industries.

Finally, an analysis of the life cycle of a business that is evaluated from the development stage to its consolidation makes it possible to anticipate the levels of investment and to know what financing needs to look for in the different venture capital or investment funds. These investments can improve business expectations, but it also depends on the correct identification of this business life cycle, which allows an adequate risk analysis.
