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Foresight Valuation July 7th LES

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  • While the company is not valued directly, this can serve to validate some key assumptions in the business model. Can increase valuation indirectly and also help raise funding

    While validations have a key role in the lean startup product iteration process, it also serves the financial model building and can help with some critical model assumptions (like: price point, penetration assumptions, stickiness, market traction, etc.). Also very important for fulfillment
  • Transcript

    • 1. CROWDFUNDING & THE JOBS ACT: THE IMPACT ON STARTUP VALUATIONS Efrat Kasznik, Founder & President Foresight Valuation Group, LLC Emerging Enterprises Committee Monthly Webinar July 7, 2014
    • 2. 2Foresight Valuation Group © 2014 Outline  Startup Valuation Trends  Factors Affecting Startup Valuations  Startup Valuations and Crowdfunding Rewards-Based Campaigns Equity-Based Fundraising
    • 3. 3Foresight Valuation Group © 2014 What’s In a Billion Dollars?
    • 4. 4Foresight Valuation Group © 2014 Key Performance Indicators (KPI): The New Valuation Fundamentals KPI = Measurable Success Factors User Engagement - active users # of Installs Customer Acquisition Cost (CAC) Customer Lifetime Value (LTV) Average Revenue Per User (ARPU) Customer Attrition (Churn Rate) Conversion Rate (funnel)
    • 5. 5Foresight Valuation Group © 2014 High Startup Valuations in 2013 Raised $225M at $3.8B Valuation (Oct 2013) $338M raised to date 70M active users $0 Revenues Raised $50M at ~$2B Valuation (Dec 2013) $123M raised to date 60M installs, 30M active users monthly 16.5M users and 350M photos shared daily $0 Revenues
    • 6. 6Foresight Valuation Group © 2014 Factors Contributing to High Valuations More Exits In 2013 User Engageme nt High Growth Industrie s More Funding Options • Angels • VCs • Private Equity • Crowdfunding • 230 IPOs; $55B US • 10k M&As deals; $100B US • Active Secondary Market • Healthcare • Internet of Things • Social Media $3.2B Valuation Nest Labs • # Active Users • # Installs/Subscriptions • Conversion Rate • Churn Rate
    • 7. 7Foresight Valuation Group © 2014 The Startup Valuation Timeline Seed Funding Stock Options Series A, B, C M&A IPO Available Information Low High Crowdfunding
    • 8. 8Foresight Valuation Group © 2014 Reward v. Equity Based Crowdfunding: Valuation Considerations Business Model Validation REWARDS EQUITY Creates Early Stage Comparables
    • 9. 9Foresight Valuation Group © 2014 Rewards Based Crowdfunding: Key Assumptions Validation Customers Production FulfillmentProfit Team
    • 10. 10Foresight Valuation Group © 2014 Equity-Based Crowdfunding: Startups Valuations Revealed Financial Statements Business Plan Valuation Public Financial Database Seed Funding Valuations 409A Valuations Employee Stock Options
    • 11. 11Foresight Valuation Group © 2014 Seed/Angel Funding: Median/Mean Round Size Source: Halo Report 2013
    • 12. 12Foresight Valuation Group © 2014 Seed/Angel Funding: Pre-Money Valuation Range Source: Halo Report 2013
    • 13. 13Foresight Valuation Group © 2014 More Transparency Leads to Higher Prices? Pre-2005 Post 409A (1/1/2005) Post JOBS Act (End of 2014?) 10% 25-30% ?? Ratio of Common Stock to Preferred Stock Prices
    • 14. THANK YOU! Efrat Kasznik President, Foresight Valuation Group ekasznik@foresightvaluation.com Office: 650-561-3374 www.foresightvaluation.com