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Start up valuation comparables 2011
 

Start up valuation comparables 2011

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Snapshot of some valuations of early stage tech companies observed in 2010 and 2011.

Snapshot of some valuations of early stage tech companies observed in 2010 and 2011.

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    Start up valuation comparables 2011 Start up valuation comparables 2011 Document Transcript

    • Start-up Valuation: Comparables 2011Methods:Searches were performed for:  Pre-existing open source reports; web searches and TechCrunch  Bio/Pharma companies & ICT/Software Tech companies.  2 – 10 employees.  No older than 10 years from founding date.  Data available on an early stage funding round (Seed to Series A).  Companies with 1st round funding below $100k were eliminated.  Funding was converted to CDN$ using Sept 23, 2011 currency rates (for UK and EU companies).  US$ was not converted to CDN$ as they were near parity at time of analysisThe first four tables are Bio/Pharma based and table five is ICT for comparison. Although Bio/Pharmaobtained higher valuations, the multipliers appear to be similar for ICT/Software.Additional Resources:http://www.business-valuation.net/small-business-valuation/ Good (works with forecast income)http://www.stanford.edu/class/e140/e140a/content/valuation_note.html Realistic & short (Stanford U)http://www.antiventurecapital.com/valuation%20resources.html Anti-Venture Capitalhttp://techcrunch.com/2010/04/04/top-vcs-debate-rising-startup-valuations-video/ Video of VCsdebating valutationhttp://www.caycon.com/valuation.php Fun reality check for most Start-upshttp://www.developmentcorporate.com/2009/09/04/could-someone-please-get-robert-scoble-to-pee-in-a-in-a-cup-twitter-can%E2%80%99t-be-worth-5-billion/ Twitter/Google/MS valuations (pee in a cup)http://www.strategicvaluationassociates.com/ccsample/ccsample1.html (Example Valuation Report)http://www.freevaluationsonline.com/ (Interesting ‘fill in the blanks’ app)http://www.fastbusinessvaluations.com/business-valuation-calculator.html (if you have revenue)http://v1.theglobeandmail.com/v5/content/calculator-smallbiz/calculate/?what=BusinessValuationUnderlying Assumption: Your revenue projections are CREDIBLE & ACCURATE!1|P ag e
    • Results (Bio/Pharma first, then ICT/Software):The search included tech based companies with no significant regulatory hurdles. Bio/Pharma data isseparated from ICT/Software data.Companies were excluded if financing data was not available, if the primary business was service-based,or if the product did not appear to be near market entry.Table 1. Bio/Pharma Private Early Financing Valuations (Millions CDN$).Company Pre-Money Raised Post-Money StageAdhezion 2.8 5.2 8 Start-upDisc-Motion 29.15 0.85 30 DevelopmentEmbrella 4 2.3 6.3 DevelopmentNeuros 1.88 1.42 3.3 Pre-Clinical TrialPill 3 0.5 3.5 DevelopmentXlumena 4.85 6.15 11 DevelopmentSOURCE: KF Wells Investment Bankers (Texas) 2010.Average Pre-money valuation: $7.6 million. If the outlier (Disc-Motion) is excluded: $3.3 million.Table 2. M&A Comparables. Restricted to companies which provided a Revenue Multiple.Target Acquired by Price (Millions$) Revenue MultipleAdvanced Medical Abbott 2,719 2.3CoreValue Medtronic 850 24.3Advanced Bionics Sonova Holdings 494.2 4Vnus Medical Covidien 395.9 3.7Cervitech NuVasive 96.2 59.8Power Medical US Surgical 56.6 5.9Candela Syneron 26.9 0.2Alveolus Merit 19 2.3Ethox Moog 15.1 0.6US Respiratory Worthington 9.7 0.3Innovative Spinal Theken Spine 9.3 4.2MEAN 101.5 4.9MEDIAN 16.5 3.0SOURCE: KF Wells Investment Bankers (Texas) 2010. All M&As occurred in 2009.2|P ag e
    • Table 3. KF Wells Investment Bankers applied four valuation methods to a model, pre-revenue medicalcompany using the same input data and obtained the following results:Analysis method Valuation obtained (Millions$)Comparables-Private 19.3Comparables-Public 7.2Comparables-M&A 23.4Discounted Cash Flow (DCF) 56.2The final Valuation for the company was $8.5 M. The value was defended as being consistent with the“current market conditions” (2010). Note that the DCF remains a popular initial method that does notseem to correlate well with actual results for 2011.Multiples “Calculated Valuation” is calculated from known (disclosed) funding. This value was selected frompublished data for known companies where the Funding $ amount is publically known and the pre-money Valuation is publically known and published. Interestingly, the valuations were consistently ~10xthe funding round, or ~2x - 3x expected revenue for the upcoming year (one year forward).Funding reported as ‘Grant’, ‘Seed’ or ‘Angel’ are entered as ‘Seed’. Funding reported as ‘Series A’ or‘Unattributed’ were ended as ‘A’Results: from TechCrunch.comTable 4. Bio/Pharma examples from 2011 data.3|P ag e
    • Table 5. ICT/Software examples from 2011 data.Discussion:Sample Valuations (pre-money)1. Comparables (anticipated revenue multiplier based) valuation (from Table 2).Assuming products with anticipated annual sales of $1.25 M, one year forward.  Value with 3.0x (Median) multiplier: = $1.25M x 3.0 = $3.75M  Value with 4.9x (Mean) multiplier: = $1.25M x 4.9 = $6.125M  Value with 2.0x (rule of thumb): = $1.25M x 2.0 = $2.5M2. Comparables (Bio/Pharma) valuation (from Table 4).  Mean: $13,200,000 (CDN)  Median: $9,020,200 (CDN)3. Comparables (ICT/Software) valuation (from Table 5).  Mean: $7,500,000 (CDN)  Median: $6,000,000 (CDN)4|P ag e
    • APPENDIX: DETAILS FOR EXAMPLE COMPANIES USEDBiotech/PharmaCiteHealthCiteHealth reports on United States health care providers including hospitals, nursing homes, dialysiscenters, drug & alcohol rehab centers, home care agencies, pharmacies & medical suppliers, and detailson every community in the U.S.Founded on 1/07. 5 employees Raised $768k in Angel roundNeuroVigilNeuroVigil, Inc. is an early stage neuroscience company focused on the analysis of brain signal or EEGdata, which currently is used in numerous medical applications but is not automated.Founded on 2007 5 employees Raised $250k in Seed and Series A roundsErydelBased in Urbino, EryDel has developed and patented a technology for drug delivery of pharmacologicalagents through erythrocytes (red blood cells). This process allow to easily load red blood cells withdrugs, proteins, contrasting agents.Founded on 2/07 7 employees Raised €2.5M in Series A roundRedbiotecRedbiotec AG develops and produces multiprotein assemblies. It specializes in producing virus-likeparticles (VLP), various types of protein complexes and single proteins, and VLP-based vaccines againstvarious infectious diseases.Founded on 11/06 6 employees Raised €312k in Unattributed roundImmunologixImmunologix, Inc. develops and produces antibody-based therapeutics for various biological targets. Itproduces human monoclonal antibodies against viral, bacterial, and tumor antigens.Founded on 9/08 5 employees Raised $200k in Unattributed roundIsolation SciencesIsolation Sciences LLC, in developing innovative technological platforms, is positioning itself as a leaderin developing unique innovative but practical solutions to meet market airborne containment needs anddesires.Founded on 1/05 3 employees Raised $212k in Seed rounds5|P ag e
    • PneumaCarePneumaCare is focused on development of products for diagnosis and monitoring of respiratory diseaseusing novel 3D imaging technology, developed by the University of Cambridge. The Company’s firstproduct is non–contact respiratory monitoringFounded on 2/09 5 employees Raised £2.45M in Seed, Angel, Grant, and Unattributed roundsUrgentRxUrgentRx provides over-the-counter medications in an innovative fast-acting powder format, available inconvenient, single-dose, credit card-sized packets for easier portability and accessibility. Initiallydeveloped for heart attack victims.Founded on 1/10 4 employees Raised $1.6M in Series A roundCaternaCaterna provides innovative treatment in the field of Ophtalmology (Amblyopia). A modern E-Healthsolution allows for the improvement of visual acuity while assuring a comfortable therapy at thepatient’s home.Founded on 6/10 5 employees Raised €650k in Unattributed roundIsentioIsentio was founded in 2005 and is based on research done on advanced DNA analysis methods by thethree founders, Øyvind Kommedal, Øystein Sæbø and Bjarte Karlsen.Founded on 2005 5 employees Raised $1.5M in Unattributed roundOther TechRoboDynamicsRoboDynamics produces Telepresence Robots which enables remote participation by deploying amobile robot as an avatar.Founded on 9/03 5 employees Raised $600k in Seed and Angel roundsMezmerizMezmeriz is building a tiny high-definition projector the size of a matchbook.Founded on 11/06 5 employees Raised $2M in Unattributed roundStillwater SupercomputingStillwater Supercomputing, Inc. designs and markets a compute accelerator for computational science.The compute accelerator is based on a specialized semiconductor device called the Stillwater KnowledgeProcessing Unit, or KPUTM.Founded on 3/07 10 employees Raised $250k in Seed round6|P ag e
    • StyleHopStyleHop provides the fashion industry with a consumer-driven forecasting tool to capture valuecurrently lost in markdowns. Scalable, fast-turnaround forecasts designed exclusively for the fashionindustry.Founded on 2009 6 employees Raised $570k in Seed roundCerevoCerevo stands for Consumer Electronics REVOlution. The Tokyo-based company is active in both the weband consumer electronics fields.Founded on 4/07 10 employees Raised $1.3M in Series A roundQitioQitio produces wireless alarm systems which can be installed by everybody. Major feature is that thecentral of the each alarm system runs on a server operated by Qitio. The connection between the user’salarm system and the server is made via GPRSFounded on 11/09 4 employees Raised $500k in Seed roundModular RoboticsModular Robotics makes robot construction kits. By combining sensor, logic and actuator blocks, youngkids can create simple reconfigurable robots that exhibit surprisingly complex behavior. roBlocks areself-describing, so they can provide helpful.Founded on 2008 4 employees Raised $487k in Grant roundMashed PixelMashed Pixel develops applications that simplify our everyday lives. By pairing social-networkingapplications for SmartPhones, along with hardware, Mashed Pixel seeks to replace single-functiongadgets—getting consumers one-step closer to mobile.Founded on 10/09 5 employees Raised $100k in Seed roundShadesCases inc.ShadesCases provides ultra-thin, stylish cases that offer full device protection including screen and clickwheel coverage.Founded on 2007 4 employees Raised $110k in Seed roundsSimpa NetworksSimpa Networks designs and markets high quality solar systems that are sold on a pay-as-you-go-basisto customers at the base of the economic pyramid (“BoP”).Founded on 3/10 7 employees Raised $1.1M in Unattributed round7|P ag e
    • EmergentDetectionEmergent Detection was founded in 2010 by Eric Fogel, MS, MBA and Keegan Hall, MBA. Whilecompleting their graduate studies at the University of Washington, the two met Dr. Aaron Falk, a PhDphysicist with a specialization in optical systems.Founded on 4/10 4 employees Raised $278k in Seed and Grant roundsBoomBotixBoomBotix is about fostering creativity and self expression. Founded in 2009 with roots in SanFrancisco’s urban art scene and the Tahoe action sports arena, the company made a merger ofalternative art and sport.Founded on 4/09 4 employees Raised $135k in Series A roundmagnetUIt was only a matter of time before social desires became wearable.Founded on 12/09 10 employees Raised $180k in Angel and Grant roundsI Am Smart TechnologyI Am Smart Technology manufactures, markets and sells the HG Smart Switch.Founded on 1/08 10 employees Raised $750k in Seed roundDisclaimer: This document is covered by the BCTIA website disclaimer.8|P ag e