This one page analysis (for reading; 2nd page for sources) presents the (e)valuation of a start-up. This is a mock-up; any resemblance to a company is coïncidental.

1. Investment Opinion: EX MARX THE SPOT (‘XM’); East Overshoe, Antarctica
Industry: sharing economy and community emersion for higher-end out-door recreational activities
Issued: Monday, December 07, 2015
Edward J. McDonnell III, CFA & PMP; Vice President-Finance; 860-690-1740
Bottom Line Up-front (BLUF): $12.1 million preliminary valuation for next twenty-four (24) months
The investment premise in support of this initial $75,000 tranche, followed by four (4) additional $500,000
seed tranches over the next two years, rests on five factors:
 ascending the learning curve by disrupting upper-end sports equipment rentals then to expand
rapidly into all outdoor sectors
 avoiding the limitation of location specific / store specific on-line equipment rental services;
 building a social community for branding, accountability, referrals, data sales and ad revenues;
 bringing the benefits of the sharing economy to the $700 billion outdoor economy; as well as,
 adding in ad revenues over time to elevate the currently conservative value multiple of 5.8x.
Industry Insights
The company’s initial target market is the $373 million U.S. upper-end equipment rental market, a peripheral
(i.e., 0.3% share) but more profitable segment of the $130 billion outdoor equipment industry for nature
enthusiasts. This is both good and bad news. The up-side is that, once it ‘nails’ the core competences in the
higher-margin upper-end equipment rental segment, XM could ‘scale’ itself across the outdoors market to
unicorn levels. The bad news is that there is already considerable competition in this first segment.
There are several upper-end equipment rental sites distributing such services provided by specialty outlets
around the world but concentrated in the Western U.S. mountain country. Additionally, there are two apps in
the market – ABC and XYZ – armed with $7.5 and $2 million of funding. Neither may present the immersive
on-line experience of XM that is expected to lock in repeat business and brand-loyalty over time.
Comparable Transactions
Our proposed value multiple based on comparables of 6.9x is drawn from a study involving: Über; AirBnB;
TaskRabbit; Zipcar; as well as Lending Club pre-IPO and Lending Club as a publicly traded company.
Learning the Ropes on the Slopes
XM is a hybrid social network for outdoors enthusiasts, bringing in revenues through on-line advertising,
primarily native adverts (i.e., a digitized form of affinity marketing); through rental brokerage fees; and, through
the packaging of accumulated customer preference data for sale. XM is setting its initial sites on the rental of
expensive equipment in the U.S., focussing first on the more active, younger half of that market sector. These
young users, often with new families, are sufficiently computer-proficient to avail themselves of the ‘sharing
economy’ (think Über or AirBnB) to avoid or defer expensive equipment purchases.
XM has an exit plan of going public or partnering with a household brand after three years. The company
strategy of conquering perhaps its toughest market first should accelerate medium-term penetration in other
markets. We expect XM to carve out 1-2% of the target market in the first two years. Should the company ramp
up quickly due to viral popularity, its share in upper-end equipment could be as high as 20-25%, with rapid
market penetration in camping, kayaking and other sports to follow.
Opportunities (multi-products and exit) Risks (suitable for sophisticated investors only)
1. partnering, via retainer fees, with large
location specific upper-end equipment rentals
for XM to refer rentals it can not broker;
2. ‘nail it and scale it’ lean start-up model;
3. applying lessons learned to other outdoors
markets; as well as,
4. positioned ideally for native adverts.
 two apps possibly building communities;
 choke-points at premium destinations creating
discontinuities in supply and demand;
 non-performance liabilities from members;
 lessons learned not proving to be transferable;
as well as,
 seed investments at risk of loss and dilution.
Industry and Transaction Overview
Key Financial Figures for Outdoors Equipment and Initial Market (Upper-end Rental; millions)
U.S. Outdoors
Equipment
Industry1
Target U.S.
Segment
(MMMing)2
Initial U.S.
Segment
(18-44)3
XM Steady-
state EBIDA4
XM Valuation
(Pre-money)5
Total
Capital
Raise
Initial
Value
Multiple
$130 billion $374 $177 $9.2 $12.1 $2.1 5.8x

2. NOTES and SOURCES
(1) The Outdoor lndustry Association. (2) Estimate derived from the Doré Group and IBIS World. (3) MMM magazine;
http://www.MMMset.us/; MMMsports Industries America; http://www.MMMbutlers.com/; U.S. Census Bureau; www.rentMMMs.com;
About Sports; www.snowlink.com/snow-sports/MMM. (4) proprietary projections based on five scenarios for unicorn; traditional
best/base/worst; and, a black-swan event; based on the first two years. (5) expected value calculated by integrating discounted cash-
flows; assessment of internal factors; a multiple of steady-state twelve months earnings before interest, depreciation and amortization;
comparables; as well as, scenario-based value per customer levels. Please note that EBIDA – EBITDA net of taxes – is used in this
analysis as taxing authorities have a claim superior to all others under all circumstances.
Sources in addition to the confidential information provided by XM:
1. http://www.thedoregroup.com/blog/u-s-MMM-snowboard-resort-industry-in-2012/
2. http://www.ibisworld.com/industry/default.aspx?indid=1653
3. http://www.MMMset.co.uk/booking/catalog/
4. http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk
5. https://www.crunchbase.com/organization/uber#/entity
6. http://www.lifehack.org/articles/technology/15-apps-that-let-you-join-the-sharing-economy.html
7. https://angel.co/spinlister-2/activity
8. https://www.crunchbase.com/organization/zipcar#/entity
9. http://www.outdoorfoundation.org/pdf/ResearchParticipation2013.pdf
10. http://www.tomsguide.com/us/best-apps-for-MMMers,review-2570.html
11. http://www.forbes.com/sites/larryolmsted/2011/11/03/12-MMM-resort-vacations-for-every-budget/
12. http://www.vailsports.com/
13. “In Sorry Shape”. Bigford, Andrew. MMM. December 1998. (Excerpt from:
https://books.google.com/books?id=q0Q19jkllvkC&printsec=frontcover#v=onepage&q&f=false)
14. https://www.crunchbase.com/organization/liftopia#/entity
15. http://www.breckenridge.com/plan-a-trip/rentals/equipment-rentals.aspx
16. http://MMM.about.com/od/MMMgear/qt/MMMrental.htm
17. http://www.deervalley.com/Rentals/Rental
18. http://www.MMMbutlers.com/
19. http://www.snowmass.com/aspen-lodging/hotel?PID=800-838-9463&source=adwords&gclid=CM_WkqStzckCFZM2gQodX60P9g
20. http://www.sec.gov/Archives/edgar/data/1409970/000119312515070385/d851207d10k.htm
21. https://www.crunchbase.com/organization/taskrabbit#/entity
22. https://outdoorindustry.org/pdf/OIA_OutdoorRecEconomyReport2012.pdf
23. https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=lending%20club%20stock
24. http://www.forbes.com/sites/timworstall/2013/01/02/explaining-the-avis-takeover-of-zipcar/
25. http://www.beechmountainresort.com/lessons-and-rentals/equipment-rentals/
26. http://www.snowsports.org/research-surveys/snow-sports-fact-sheet
27. https://www.crunchbase.com/organization/airbnb#/entity
28. http://www.nytimes.com/1990/02/05/sports/on-your-own-rentals-give-MMMers-variety-and-room-to-maneuver.html
29. https://www.sba.gov/sites/default/files/rs343tot.pdf
30. http://www.theatlantic.com/business/archive/2012/02/no-business-like-snow-business-the-economics-of-big-MMM-resorts/252180/
31. https://www.snowlink.com/snow-sports/MMM/intro-to-MMM/MMMs-rent-or-buy/
32. http://www.baltimoremagazine.net/2013/12/the-12-best-MMM-resorts-near-baltimore
33. Business Process and Modeling Design. Laguna, Manuel and Marklund, Johan. 2011. (Excerpt from https://books.google.com/books?id=d-
V8c8YRJikC&printsec=frontcover#v=onepage&q&f=false)
34. http://www.summitdaily.com/news/15799259-113/MMM-industry-report-breaks-down-snowsports-retail-sales
35. http://www.MMMset.us/
36. https://www.crunchbase.com/organization/lending-club#/entity
37. http://www.statista.com/statistics/206544/estimated-number-of-MMMer-visits-in-the-us-since-2000/
38. https://www.rentMMMs.com/#!/
39. https://www.quora.com/Startup-and-Private-Valuations/What-is-the-latest-valuation-of-TaskRabbit
40. http://www.popularmechanics.com/adventure/sports/a10090/should-you-rent-MMMs-or-buy-them-16482798/