This document contains a presentation by Xavier Corman and Martin van Wunnik on valuing startups for financing. The presentation covers financial valuation basics including using the balance sheet, profit and loss statements, discounted cash flow analysis using weighted average cost of capital and internal rate of return. It also discusses non-financial aspects important to investors and provides an overview of valuation tools and how dilution and relution of shares occurs when raising capital. The document promotes free downloads of the full presentation.

1. Xavier Corman | Martin van Wunnik 128/05/2013 Xavier Corman | Martin van Wunnik 128/05/2013
Finance for Startups
How to valuate your company,
with Capricorn Venture Partners
Martin van Wunnik
Xavier Corman

2. Xavier Corman | Martin van Wunnik 228/05/2013 Xavier Corman | Martin van Wunnik 228/05/2013
Sponsors

3. Xavier Corman | Martin van Wunnik 328/05/2013 Xavier Corman | Martin van Wunnik 328/05/2013
Finance for Startups
Introduction
• Financial Valuation Basics
• Non Financials Aspects
• Capricorn Venture Partners
• Q&A

4. Xavier Corman | Martin van Wunnik 428/05/2013 Xavier Corman | Martin van Wunnik 428/05/2013
This presentation is available for free:
http://www.slideshare.net/XavierCorman
http://www.slideshare.net/FinanceCoach24

5. Xavier Corman | Martin van Wunnik 528/05/2013 Xavier Corman | Martin van Wunnik 528/05/2013
Who we are
Martin van Wunnik
Xavier Corman

6. Xavier Corman | Martin van Wunnik 628/05/2013 Xavier Corman | Martin van Wunnik 628/05/2013
Financial Valuation Basics
Based on Balance Sheet
Based on Profit & Loss Statement
DCF – Discounted Cash Flows
with WACC – Weighted Average Cost of Capital
& IRR – Internal Rate of Return

7. Xavier Corman | Martin van Wunnik 728/05/2013 Xavier Corman | Martin van Wunnik 728/05/2013
Based on Balance Sheet
Net Assets = Total Assets – Total long term debts
Adjusted Net Assets = : +/- adjustments
Provisions, historical values (land, buildings),
‘normalized salaries’, …
Liquidation value :
Not going-concern (social liabilities, C4, …)
Goodwill, Customers, Patent, etc…

8. Xavier Corman | Martin van Wunnik 828/05/2013 Xavier Corman | Martin van Wunnik 828/05/2013
Based on Profit & Loss Statement
Multiples based on:
Sales
EBITDA
EBIT
Taxable Profit
Net Profit
www.impulse.de
•

9. Xavier Corman | Martin van Wunnik 928/05/2013 Xavier Corman | Martin van Wunnik 928/05/2013
DCF – Discounted Cash Flows

10. Xavier Corman | Martin van Wunnik 1028/05/2013 Xavier Corman | Martin van Wunnik 1028/05/2013
WACC
Weighted Average Cost of Capital
Time & Risk
The WACC is the cost of each capital component,
multiplied by its proportional weight,
and then summing them up.

11. Xavier Corman | Martin van Wunnik 1128/05/2013 Xavier Corman | Martin van Wunnik 1128/05/2013
Cost of Equity:
Which elements ?
re = rf + β × (rm − rf)
Capital Asset Pricing Model (CAPM)
rf = risk-free rate
β = equity beta (volatile)
(rm − rf) = market risk premium

12. Xavier Corman | Martin van Wunnik 1228/05/2013 Xavier Corman | Martin van Wunnik 1228/05/2013
IRR – Internal Rate of Return
IRR makes DCF = 0
Present value of all future cash flow
= initial investment (i.e. break even)
The higher IRR, the better
(when all other factors are equal)

13. Xavier Corman | Martin van Wunnik 1328/05/2013 Xavier Corman | Martin van Wunnik 1328/05/2013
Investor’s motivation
Return on investment
Social aspect
Influence on the management of the company

14. Xavier Corman | Martin van Wunnik 1428/05/2013 Xavier Corman | Martin van Wunnik 1428/05/2013
IRR (Internal Rate Return)

15. Xavier Corman | Martin van Wunnik 1528/05/2013 Xavier Corman | Martin van Wunnik 1528/05/2013
Evolution IRR/maturity

16. Xavier Corman | Martin van Wunnik 1628/05/2013 Xavier Corman | Martin van Wunnik 1628/05/2013
Pré-money & Post-money

17. Xavier Corman | Martin van Wunnik 1728/05/2013 Xavier Corman | Martin van Wunnik 1728/05/2013
Evolution IRR/maturity

18. Xavier Corman | Martin van Wunnik 1828/05/2013 Xavier Corman | Martin van Wunnik 1828/05/2013
Idea MVP 1st clients Break-even TOTAL
Scenario 1 Capital increase 1.000.000 1.000.000
Shares investor 40%
Type of investor BA+VC
Cost of capital 100% 50% 35% 100%
Scenario 2 Capital increase 50.000 200.000 750.000 1.000.000
Shares investor 5% 15% + 4% = 23% 15%+13%+4%=31%
Type of investor FFF BA VC
Cost of capital 100% 50% 35% 41%
Cash need
IRR

19. Xavier Corman | Martin van Wunnik 1928/05/2013 Xavier Corman | Martin van Wunnik 1928/05/2013
Scenario 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. Xavier Corman | Martin van Wunnik 2028/05/2013 Xavier Corman | Martin van Wunnik 2028/05/2013
Valuation - What is dilution ?

21. Xavier Corman | Martin van Wunnik 2128/05/2013 Xavier Corman | Martin van Wunnik 2128/05/2013
Relution / Dilution

22. Xavier Corman | Martin van Wunnik 2228/05/2013 Xavier Corman | Martin van Wunnik 2228/05/2013
Tools for relution
• Options (call/put)
• Warrants

23. Xavier Corman | Martin van Wunnik 2328/05/2013 Xavier Corman | Martin van Wunnik 2328/05/2013
Capricorn Venture Partners
Free download :
http://www.slideshare.net/XavierCorman
http://www.slideshare.net/FinanceCoach24