About Dave Parker
Startup Market Valuation Drivers
Company Valuation Drivers
Creating, Delivering, & Capturing Value
Revenue Models
The Data
The 14
Public Comps
Driving Startup Valuations for Funding & Exit Dave Parker
About Dave Parker and NextPath Advisors
Market Valuation Driver
Company Valuation Drivers
Creating, Delivering, & Capturing Value
Revenue Models
The Data
Public Company multiples
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About Dave
Why Startup Fail and You Shouldn’t
Market Valuation Driver
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Creating, Delivering, & Capturing Value
Revenue Models
The Data
The 14
InvestNOLA Applying a Crisis Framework - Fall Training Series Dave Parker
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Trajectory Startup Program Abu Dhabi Day 2Dave Parker
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Pricing and Metrics that Matter
Go-to-Market
Traction and Product / Market Fit
Pitch Reviews
Outcomes for this presentation:
Business model breakdown
Identify Key Inputs
Identify Unit Economics
Choose primary/secondary revenue models
Go-to-Market – Marketing and Sales choices
Driving Startup Valuations for Funding & Exit Dave Parker
About Dave Parker and NextPath Advisors
Market Valuation Driver
Company Valuation Drivers
Creating, Delivering, & Capturing Value
Revenue Models
The Data
Public Company multiples
Icorps University of Washington Program 07.06.2021Dave Parker
UW iCorps Program. Will your startup make money or be a statistic?
About Dave
Why Startup Fail and You Shouldn’t
Market Valuation Driver
Company Valuation Drivers
Creating, Delivering, & Capturing Value
Revenue Models
The Data
The 14
InvestNOLA Applying a Crisis Framework - Fall Training Series Dave Parker
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How Startup Make Money – 14 Revenue Models
Pricing and Metrics that Matter
Go-to-Market
Traction and Product / Market Fit
Pitch Reviews
Outcomes for this presentation:
Business model breakdown
Identify Key Inputs
Identify Unit Economics
Choose primary/secondary revenue models
Go-to-Market – Marketing and Sales choices
Techstars Seattle — Startup Revenue Models and ForecastingDave Parker
Business model breakdown
Identify Key Inputs
Identify Unit Economics
Choose primary/secondary revenue models
Go-to-Market – Marketing and Sales choices
Choose financial template
Common mistakes
Techstars Taiwan - Going Global and Revenue Models Dave Parker
Dave Parker, Author Trajectory: Startup—Ideation to Product/Market Fit.
About Dave
But first, Product/Market Fit
Going Global Checklist
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About Dave
Business model breakdown
Identify Key Inputs, Identify Unit Economics
Choose primary/secondary revenue models
Marketing and Sales
Pricing Mechanics
Enterprise Value
Trajectory Startup Program Session 1 - Bahrain Cycle 7Dave Parker
April 2021
Intro
Telling Your Story in 10/12 Slides
Research & Competitive Analysis
Markets
Value Propositions
Customer Development Data
Awkward Co-Founder Discussions
Your startups is (hopefully) unique - but how you monetize your startup isn't. There are 16 startup revenue models - from simple (services and commerce) to complex (big data and panels). What to know how startups make money? PIck one or two... but you don't have to invent a new one.
Copyright DKParker, LLC 2018
Trajectory Series Startup Program Session 1 (Cairo Cycle 16)Dave Parker
Intro
Telling Your Story in 10/12 Slides
Research & Competitive Analysis
Markets
Value Propositions
Customer Development Data
Awkward Co-Founder Discussions
Trajectory Startup Program Session 2 (Cairo July 2021)Dave Parker
Flat6 Labs Cairo Bootcamp Program
Market Sizing
Customer Development Data
How Startups Make Money
Marketing/Sales/Business Development
Go-to-Market Planning
Pitch Reviews
Techstars Seattle — Startup Revenue Models and ForecastingDave Parker
Business model breakdown
Identify Key Inputs
Identify Unit Economics
Choose primary/secondary revenue models
Go-to-Market – Marketing and Sales choices
Choose financial template
Common mistakes
Techstars Taiwan - Going Global and Revenue Models Dave Parker
Dave Parker, Author Trajectory: Startup—Ideation to Product/Market Fit.
About Dave
But first, Product/Market Fit
Going Global Checklist
Pricing & Revenue Models
Valuation Data
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About Dave
Business model breakdown
Identify Key Inputs, Identify Unit Economics
Choose primary/secondary revenue models
Marketing and Sales
Pricing Mechanics
Enterprise Value
Trajectory Startup Program Session 1 - Bahrain Cycle 7Dave Parker
April 2021
Intro
Telling Your Story in 10/12 Slides
Research & Competitive Analysis
Markets
Value Propositions
Customer Development Data
Awkward Co-Founder Discussions
Your startups is (hopefully) unique - but how you monetize your startup isn't. There are 16 startup revenue models - from simple (services and commerce) to complex (big data and panels). What to know how startups make money? PIck one or two... but you don't have to invent a new one.
Copyright DKParker, LLC 2018
Trajectory Series Startup Program Session 1 (Cairo Cycle 16)Dave Parker
Intro
Telling Your Story in 10/12 Slides
Research & Competitive Analysis
Markets
Value Propositions
Customer Development Data
Awkward Co-Founder Discussions
Trajectory Startup Program Session 2 (Cairo July 2021)Dave Parker
Flat6 Labs Cairo Bootcamp Program
Market Sizing
Customer Development Data
How Startups Make Money
Marketing/Sales/Business Development
Go-to-Market Planning
Pitch Reviews
Flat6 Labs Cairo Cycle 15 Bootcamp Day 2 with Dave Parker Dave Parker
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- Pricing and Metrics that Matter
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- When, Why and How to Pivot
- Traction and Product / Market Fit
- Product and Company Roadmap
- Funding 101
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Flat6 Abu Dhabi Ignite Program July 2021
Outcomes for the day:
Telling a financial story
Key metrics
Templates with Key Inputs
Common mistakes
Rolling up your sleeves
How Startup Make Money –
Marketing
Sales
Business Development
14 Revenue Models
Pricing and Metrics that Matter
Go-to-Market
Traction and Product / Market Fit
Pitch Reviews
Flat6 Labs Bahrain Cycle 5 Bootcamp Day 3Dave Parker
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Marketing Sales
Business Development Revenue Models
Product Market Fit
Metrics that Matter
Financial Model Templates
Flat6 Labs Cairo Cycle 15 Bootcamp Day 1Dave Parker
18 July 2020. Flat6 Labs, Cycle 15 Bootcamp. Dave Parker
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- Telling Your Story in 11 Slides
- Research & Competitive Analysis
- Markets
- Value Propositions
- Customer Development Data
- Awkward Co-Founder Discussions
Intro
Telling Your Story in 10/12 Slides
Research & Competitive Analysis
Markets
Value Propositions
Customer Development Data
Awkward Co-Founder Discussions
ROTR/OHUB Program
Intro
Telling Your Story in 11/13 Slides
Research & Competitive Analysis
Markets
Value Propositions
Customer Development Data
Awkward Co-Founder Discussions
Flat6 Labs Bahrain Cycle 6 Bootcamp Day 1 Dave Parker
Introductions, Telling your story in 10/12 Slide, Research, Market Sizing, Value Propositions, Customer Development Data, Awkward co-founder discussions.
KIC - Korean Innovation Center - WTIA Bootcamp Day 1Dave Parker
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Telling Your Story in 11 Slides
Research & Competitive Analysis
Markets
Value Propositions
Customer Development Data
Awkward Co-Founder Discussions
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Understand the difference between sales & marketing methods, pricing, business models and financial models.
Use this financial model components to get your Startup Financial Model venture ready.
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Your startup idea is unique - but the business model isn't unique. What can you learn from established fast growth startup companies? The models and key metrics they use to monetize their ideas.
learn more about your revenue models and how they compare to other peer & competitor companies at www.lumeric.com
Similar to Driving Startup Enterprise Value with Lighter Capital 2021.06.30 (20)
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Telling Your Story in 10/12 Slides
Research & Competitive Analysis
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Value Propositions
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Awkward Co-Founder Discussions
Building a Great Startup Culture - Flat6 Ignite Program, Abu DhabiDave Parker
How do you build a great startup culture? It starts with Vision, Mission, and Values. This workshop helps you put those pieces together.
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LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.🤯
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Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
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Business Valuation Principles for EntrepreneursBen Wann
This insightful presentation is designed to equip entrepreneurs with the essential knowledge and tools needed to accurately value their businesses. Understanding business valuation is crucial for making informed decisions, whether you're seeking investment, planning to sell, or simply want to gauge your company's worth.
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Driving Startup Enterprise Value with Lighter Capital 2021.06.30
1. Copyright, DKParker, LLC 2020
Driving Startup Enterprise Value
Dave Parker
@DaveParkerSEA
www.NextPathAdvisors.com
Dave@NextPathAdvisors.com
2. Copyright, DKParker, LLC 2020
Agenda
¤ About Dave
¤ Market Valuation Drivers
¤ Company Valuation Drivers
¤ Creating, Delivering, & Capturing Value
¤ Revenue Models
¤ The Data
¤ The 14
¤ Public Comps
3. Copyright, DKParker, LLC 2020
About Dave
¤ 5X founder, raised $12M, exited $85M
¤ Former SVP Programs at UP Global (Startup Weekend)
¤ Startup Next creator, Startup Week
¤ Author – ”Trajectory: Startup – Ideation to Product Market
Fit” shipping today!
¤ 2X VC and random Angel
¤ >14 transactions – now with NextPath Advisors
4. Copyright, DKParker, LLC 2020
Resources
¤ www.dkparker.com
¤ 14 Revenue Model Excerpt
¤ https://www.dkparker.com/trajectory-excerpt/
¤ Amazon Book Order
6. Copyright, DKParker, LLC 2020
Top Market Value Drivers
¤ Market – big/nascent markets win
¤ Team – subject matter experts, balanced team
¤ Product – stickiness, problem solved or just fun
¤ Timing – not in your control, only in retrospect
¤ Competition – haven’t the sucked oxygen out of the room
¤ Traction – early indication of proof - Flywheel effect
¤ Unit Economics – Revenue Model, Market & Sales
¤ Efficient capital—Tesla vs Snap
Venture Ready Score
7. Copyright, DKParker, LLC 2020
So, It All Matters!
¤ Great Team in Bad Market = Failure or meh result
¤ OK team + Great Market = could be great result
¤ Great Product + no path to revenue = failure
¤ OK product + great monetization = make $$
¤ Great market + great team + great product + solid
monetization + great execution = monster result
8. Copyright, DKParker, LLC 2020
Categorizing the Solution
Product Service
B2B Salesforce Accenture
B2C Spotify For profit school
9. Copyright, DKParker, LLC 2020
Creating Value:
Product or Service,
Market, Team
Delivering
Value: Rev
Model, Pricing,
Marketing &
Sales
Capturing
Value
Reasonable to
Exceptional
Returns
Business Model Breakdown
10. Copyright, DKParker, LLC 2020
Creating Value
¤ Product or Service or combination
¤ Cost to Build – Team
¤ Engineering
¤ Design
¤ Hosting
¤ Manufacturing
¤ Cost of Delivery & Support
11. Copyright, DKParker, LLC 2020
Delivering Value
¤ Revenue Model
¤ Pricing
¤ Customer Acquisition Cost (CAC)
¤ Marketing Methods and Spend
¤ Sales Models
¤ Lifetime Value (LTV)
¤ Note Promotions are not pricing or revenue models (e.g.
freemium is a promotion)
12. Copyright, DKParker, LLC 2020
Capturing Value
What’s left over!
¤ Topline Revenue
¤ Gross Margins
¤ Net Profit
15. Copyright, DKParker, LLC 2020
The Data
¤ Background – revenue templates
¤ 2654 companies from Crunchbase
¤ 5+ year tracking
¤ Surprises
¤ Seed 1-10
¤ Combinations models
¤ * on short time from Seed to A
¤ Failures
¤ Wayback Machine
¤ >80% lacked clear CTA and Value Prop
17. Copyright, DKParker, LLC 2020
1. Fee for Service
¤ Example: Accenture, Stride (Education)
¤ Use: B2B & B2C
¤ Key Metrics
¤ Project Revenue
¤ Cost of delivering (usually time)
¤ Gross Margin
¤ Services are hard to scale because they require people to
deliver including Restaurant, Contractors, etc.
¤ Services include markup on cost of goods sold
18. Copyright, DKParker, LLC 2020
2. Productize a Service
¤ Example: SW Airlines, Guidant Financial, IBM
¤ Your offerings is generally complex and requires services
to deploy
¤ Gross margin on Services >35%
¤ Product development comes with services
¤ Use: B2C & B2B
¤ Examples: Moz, service company convert to tools.
¤ Challenges – difficult to make the transition away from
services
19. Copyright, DKParker, LLC 2020
3. Commerce
¤ Example: Wayfair, Lululemon
¤ Use: B2C & B2B
¤ Key Metrics:
¤ Wholesale or cost of goods sold
¤ Average Margin %
¤ Average Basket
¤ Commerce – Physical Goods- Wholesale, cost of goods,
retail, average margin, physical good
¤ Notes: Can mature into marketplace
20. Copyright, DKParker, LLC 2020
4. Subscription
¤ Example: Salesforce, Spotify
¤ Use: B2C & B2B
¤ Key Metrics
¤ Average Revenue Per User (ARPU)
¤ Conversion ratio – e.g. trial to purchase
¤ Churn
¤ Tiered pricing to optimize customer profiles/revenues
¤ Notes: High multiple, forecastable revenue
21. Copyright, DKParker, LLC 2020
5. Metered Service
¤ Example: Twilio, AWS, UIPath, Plaid Tech
¤ Use: Favors B2B
¤ Key Metrics
¤ Average Revenue Per User (ARPU)
¤ Usage growth over time
¤ Churn
¤ Challenges: infrastructure required at launch
¤ Notes: Highest multiple, forecastable revenue
22. Copyright, DKParker, LLC 2020
6. Transaction Fees/Rental
¤ Example: Stripe, Chegg
¤ Use: B2C & B2B
¤ Key Metrics
¤ Average transaction revenue
¤ Fee % per transaction
¤ Number of transactions
¤ Challenges: Margins are small (15%), need efficiency
¤ Notes: Don’t start too low
23. Copyright, DKParker, LLC 2020
7. Marketplaces
¤ Example: eBay, Alibaba, Uber
¤ Use: B2C & B2B
¤ Key Metrics
¤ Average Transaction Amount
¤ Number of Monthly Transactions
¤ Commission %
¤ Challenges: two sided marketplaces require you start
with one side, value to seller & Product market fit (x2)
¤ Notes: critical mass or marketplace required
24. Copyright, DKParker, LLC 2020
8. Combinations
¤ Example: SmartSheet, conglomerates at scale
¤ Combination business models happen for two reasons
¤ You don’t know which model is right
¤ At scale you can expand revenue sources
¤ Examples: Hardware sensors + software services to create
data analytics. At Scale, Amazon, Microsoft
¤ Challenges – most require scale or at least traction
¤ Mature faster
25. Copyright, DKParker, LLC 2020
9. Gaming
¤ Example: King.com/Candy Crush, Blizzard
¤ Use: B2C Only
¤ Key Metrics:
¤ Downloads
¤ % play
¤ Average in app purchase
¤ Challenges – tends to be “hit driven business”
¤ Notes: use in first 21 days is a predictor of success
27. Copyright, DKParker, LLC 2020
11. New Media
¤ Example: SnapChat, Clubhouse
¤ Use: B2C only
¤ Key Metrics:
¤ K-Factor (Viral Co-efficient)
¤ Network effect of inviting others to join
¤ Challenges – K-Factor is hard. Little revenue until scale
¤ Notes: Everyone wants to! Not happening in B2B
¤ No revenue actually required – GREAT mulitple
28. Copyright, DKParker, LLC 2020
12. Big Data
¤ Examples: PatientsLikeMe, Splunk
¤ Use: B2B
¤ Key Metrics:
¤ Per API Call
¤ Per record pricing
¤ Frequency/recency
¤ To monetize data, you need to have the data in
advance or massive cash
29. Copyright, DKParker, LLC 2020
13. Lead Generation
¤ Example: Mint.com, Chime.com, AllStarDirectories,
¤ Use: B2C (selling consumers data), B2B
¤ Key Metrics
¤ Cost to generate traffic
¤ % conversion of form data
¤ Price per lead
¤ Challenges: Highly competitive, barrier of entry is low
¤ Notes: Conversion rates average 0.06%
30. Copyright, DKParker, LLC 2020
14. Licensing
¤ Example: Think Microsoft office license or server license –
before subscription. Content Licensing
¤ Use: B2B
¤ Key Metrics:
¤ Duration of license
¤ Upgrades & maintenance (20-25% annually)
¤ Use can be based on vertical market or geography
31. Copyright, DKParker, LLC 2020
Revenue Models– Primary/Secondary
1. Fee for Service
2. Productize a Service
3. Commerce
4. Subscription
5. Metered Service
6. Transaction Fee/Rental
7. Marketplace
8. Combinations
9. Gaming
10.Advertising/Search
11.New Media
12.Big Data
13.Lead Generation
14.Licensing
32. Copyright, DKParker, LLC 2020
Public Comps
¤ Public companies are the likely buyer, if you’re going to be
acquired, it’s a good place to start
¤ You can get their Enterprise value
¤ Price (market cap)/Sales (ttm) Ratio
¤ Most early-stage companies don’t have profit, so valuing based on
EBITDA or Earning (PE) is rough
¤ Notes:
¤ Combination models aren’t clearly calculated
¤ Current stock prices reflect Covid Era pricing (ttm)
33. Copyright, DKParker, LLC 2020
Public Multiples
Model Example
Price/Sales
Ratio (TTM)
1 Services Stride, Accenture .75-1.5X
2 Productize a Service SWAir, IBM 1-2X
3 Commerce Wayfair, Lululemon 4-5X
4 Subscription Salesforce, Spotify 8-12X
5 Metered Service Twilio, AWS, UIPath 24X
6 Transaction Fee/Rental TripAdvisor, Chegg 12-15X
7 Marketplace eBay, UBER 4-8X
8 Combinations SmartSheet, Amazon 8-12X
9 Gaming Activision - Blizzard 7-10X
10 Advertising/Search Alphabet, Facebook 7-9X
11 New Media v. Old Snap 3-23X
12 Big Data Splunk, Plaid Tech 8-10X
13 Lead Generation Chime, Mint 4-5X
14 Licensing Broadcom, Oracle 5-9X
34. Copyright, DKParker, LLC 2020
A few last sell side notes
¤ Rule of 40 (now 50)—Growth or Growth and Profit >40%
¤ Logical and acquisitive up market buyers prefer early
relationships
¤ Invested Capital to Revenue is under 3:1 (prefer 1:1)
¤ Create competition between buyers will increase your
price by 40% or more
35. Copyright, DKParker, LLC 2020
Summary
¤ Dave did not say: “This is a method you can use to calculate
your current valuation” especially for pre-revenue companies!
¤ Too many variable at early revenue stage to calculate
¤ See Berkus Method for a 20 year method
¤ It can help you pick you potential buyers
¤ Based on track record (size/stage/tech)
¤ Business Development as a process
¤ The data is still a work in progress
¤ Startups need to be creative, in product and marketing. Not
revenue models