How to valuate your company, with Capricorn Venture Partners (Finance for Startups- part 1)

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How to valuate your company, with Capricorn Venture Partners
Finance for Startups event, May 28, 2013, @ICAB Brussels

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How to valuate your company, with Capricorn Venture Partners (Finance for Startups- part 1)

  1. 1. Xavier Corman | Martin van Wunnik 128/05/2013 Xavier Corman | Martin van Wunnik 128/05/2013Finance for StartupsHow to valuate your company,with Capricorn Venture PartnersMartin van WunnikXavier Corman
  2. 2. Xavier Corman | Martin van Wunnik 228/05/2013 Xavier Corman | Martin van Wunnik 228/05/2013Sponsors
  3. 3. Xavier Corman | Martin van Wunnik 328/05/2013 Xavier Corman | Martin van Wunnik 328/05/2013Finance for StartupsIntroduction• Financial Valuation Basics• Non Financials Aspects• Capricorn Venture Partners• Q&A
  4. 4. Xavier Corman | Martin van Wunnik 428/05/2013 Xavier Corman | Martin van Wunnik 428/05/2013This presentation is available for free:http://www.slideshare.net/XavierCormanhttp://www.slideshare.net/FinanceCoach24
  5. 5. Xavier Corman | Martin van Wunnik 528/05/2013 Xavier Corman | Martin van Wunnik 528/05/2013Who we areMartin van WunnikXavier Corman
  6. 6. Xavier Corman | Martin van Wunnik 628/05/2013 Xavier Corman | Martin van Wunnik 628/05/2013Financial Valuation BasicsBased on Balance SheetBased on Profit & Loss StatementDCF – Discounted Cash Flowswith WACC – Weighted Average Cost of Capital& IRR – Internal Rate of Return
  7. 7. Xavier Corman | Martin van Wunnik 728/05/2013 Xavier Corman | Martin van Wunnik 728/05/2013Based on Balance SheetNet Assets = Total Assets – Total long term debtsAdjusted Net Assets = : +/- adjustmentsProvisions, historical values (land, buildings),‘normalized salaries’, …Liquidation value :Not going-concern (social liabilities, C4, …)Goodwill, Customers, Patent, etc…
  8. 8. Xavier Corman | Martin van Wunnik 828/05/2013 Xavier Corman | Martin van Wunnik 828/05/2013Based on Profit & Loss StatementMultiples based on:SalesEBITDAEBITTaxable ProfitNet Profitwww.impulse.de•
  9. 9. Xavier Corman | Martin van Wunnik 928/05/2013 Xavier Corman | Martin van Wunnik 928/05/2013DCF – Discounted Cash Flows
  10. 10. Xavier Corman | Martin van Wunnik 1028/05/2013 Xavier Corman | Martin van Wunnik 1028/05/2013WACCWeighted Average Cost of CapitalTime & RiskThe WACC is the cost of each capital component,multiplied by its proportional weight,and then summing them up.
  11. 11. Xavier Corman | Martin van Wunnik 1128/05/2013 Xavier Corman | Martin van Wunnik 1128/05/2013Cost of Equity:Which elements ?re = rf + β × (rm − rf)Capital Asset Pricing Model (CAPM)rf = risk-free rateβ = equity beta (volatile)(rm − rf) = market risk premium
  12. 12. Xavier Corman | Martin van Wunnik 1228/05/2013 Xavier Corman | Martin van Wunnik 1228/05/2013IRR – Internal Rate of ReturnIRR makes DCF = 0Present value of all future cash flow= initial investment (i.e. break even)The higher IRR, the better(when all other factors are equal)
  13. 13. Xavier Corman | Martin van Wunnik 1328/05/2013 Xavier Corman | Martin van Wunnik 1328/05/2013Investor’s motivationReturn on investmentSocial aspectInfluence on the management of the company
  14. 14. Xavier Corman | Martin van Wunnik 1428/05/2013 Xavier Corman | Martin van Wunnik 1428/05/2013IRR (Internal Rate Return)
  15. 15. Xavier Corman | Martin van Wunnik 1528/05/2013 Xavier Corman | Martin van Wunnik 1528/05/2013Evolution IRR/maturity
  16. 16. Xavier Corman | Martin van Wunnik 1628/05/2013 Xavier Corman | Martin van Wunnik 1628/05/2013Pré-money & Post-money
  17. 17. Xavier Corman | Martin van Wunnik 1728/05/2013 Xavier Corman | Martin van Wunnik 1728/05/2013Evolution IRR/maturity
  18. 18. Xavier Corman | Martin van Wunnik 1828/05/2013 Xavier Corman | Martin van Wunnik 1828/05/2013Idea MVP 1st clients Break-even TOTALScenario 1 Capital increase 1.000.000 1.000.000Shares investor 40%Type of investor BA+VCCost of capital 100% 50% 35% 100%Scenario 2 Capital increase 50.000 200.000 750.000 1.000.000Shares investor 5% 15% + 4% = 23% 15%+13%+4%=31%Type of investor FFF BA VCCost of capital 100% 50% 35% 41%Cash needIRR
  19. 19. Xavier Corman | Martin van Wunnik 1928/05/2013 Xavier Corman | Martin van Wunnik 1928/05/2013Scenario 1•Premoney: 2M•Investment : 1 M•Postmoney : 3 M•Shares for 0,5 M: 16,7 %Scenario 2•Premoney: 2M•Investment : 0,5 M•Postmoney : 2,5 M•Shares for 0,5 M: 20 %
  20. 20. Xavier Corman | Martin van Wunnik 2028/05/2013 Xavier Corman | Martin van Wunnik 2028/05/2013Valuation - What is dilution ?
  21. 21. Xavier Corman | Martin van Wunnik 2128/05/2013 Xavier Corman | Martin van Wunnik 2128/05/2013Relution / Dilution
  22. 22. Xavier Corman | Martin van Wunnik 2228/05/2013 Xavier Corman | Martin van Wunnik 2228/05/2013Tools for relution• Options (call/put)• Warrants
  23. 23. Xavier Corman | Martin van Wunnik 2328/05/2013 Xavier Corman | Martin van Wunnik 2328/05/2013Capricorn Venture PartnersFree download :http://www.slideshare.net/XavierCormanhttp://www.slideshare.net/FinanceCoach24

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