Startany.com. Remote Acceleration Program.
---------------------------------------------------------------
The Founder’s Guide to Early-Stage Valuation
Presented by Stephen R. Poland, co-founder 1x1 Media.
For many early-stage entrepreneurs assigning a valuation to your startup is one of the more intimidating tasks encountered during the fundraising quest. Based on the popular Founders’ Pocket Guide: Startup Valuation, this webinar provides a quick reference to all of the key topics around early-stage startup valuation and provides step-by- step examples for several valuation methods.
This webinar helps startup founders learn:
What a startup valuation is and when you need to start worrying about it.
Key terms and definitions associated with valuation, such as pre-money, post-money, and dilution.
How investors view the valuation task and what their expectations are for early-stage companies.
How the valuation fits with your target raise amount and resulting founder equity ownership.
How to do the simple math for calculating valuation percentages.
How to estimate your company valuation using several accepted methods.
Stephen R. Poland
Stephen R. Poland has worked with hundreds of startups and entrepreneurs, mentoring them on startup mechanics, funding plans, pitch decks, financial models, and due diligence documentation for the angel funding process.
Steve brings more than 20 years' experience in startups and entrepreneurship to his career. Leveraging leadership roles with the Walt Disney Company, MacMillan Publishing, and Bertelsmann, Steve co-founded startups in the digital music and on-demand media manufacturing sectors, as well an early days anti-virus product.
Along with being co-founder of 1x1 Media, Steve works as a venture growth advisor in Western North Carolina.
Raising Money for Your Startup: Why Fundraising is a Literary Process, Not Fi...Tearsheet
Given to a group of startup entrepreneurs at a local accelerator, this presentation is intended to provide a different -- maybe, contrarian -- viewpoint on the fundraising process.
Instead of learning finance next time you pitch an angel or VC, consider instead learning how to better tell stories.
How to avoid wasted time fundraising, and know a tire-kicker when you see one. Know your "customer" - understand how the venture business works, and what motivates VCs. Get educated on the basics of the venture fund business model, and how VCs stay in business. Find out how venture model dynamics and industry trends impact your company.
The summary of how startups get fundraising and how to measure their valuation.
This file demonstrates the methods and procedures of startup valuation.
Entrepreneurs need to put a value on their start-ups in order to raise money, and investors need to put a value on their investments to ensure an adequate return on investment. No negotiating item between entrepreneur and investor creates a wider gulf than this one. The two parties may agree on every other point but will have diametrically opposing views on what the start-up is worth and how much equity the investor should receive in exchange for his capital.
Valuation is challenging for a start-up. Since young businesses take time to become profitable, the trick of valuing start-ups is to focus on the future. If you want your start-up to be a masterpiece, you’ll need to use the right side of your brain as much as your left to determine value.
Is business valuation art or science? Is it possible to place a credible valuation on a Start-up? What is Pre-money valuation? What is Post-money valuation? How much your company worth? Are you really worth anything until you’re profitable? How to value your start-up for a VC? What are the Start-up valuation methods?
Startany.com. Remote Acceleration Program.
---------------------------------------------------------------
The Founder’s Guide to Early-Stage Valuation
Presented by Stephen R. Poland, co-founder 1x1 Media.
For many early-stage entrepreneurs assigning a valuation to your startup is one of the more intimidating tasks encountered during the fundraising quest. Based on the popular Founders’ Pocket Guide: Startup Valuation, this webinar provides a quick reference to all of the key topics around early-stage startup valuation and provides step-by- step examples for several valuation methods.
This webinar helps startup founders learn:
What a startup valuation is and when you need to start worrying about it.
Key terms and definitions associated with valuation, such as pre-money, post-money, and dilution.
How investors view the valuation task and what their expectations are for early-stage companies.
How the valuation fits with your target raise amount and resulting founder equity ownership.
How to do the simple math for calculating valuation percentages.
How to estimate your company valuation using several accepted methods.
Stephen R. Poland
Stephen R. Poland has worked with hundreds of startups and entrepreneurs, mentoring them on startup mechanics, funding plans, pitch decks, financial models, and due diligence documentation for the angel funding process.
Steve brings more than 20 years' experience in startups and entrepreneurship to his career. Leveraging leadership roles with the Walt Disney Company, MacMillan Publishing, and Bertelsmann, Steve co-founded startups in the digital music and on-demand media manufacturing sectors, as well an early days anti-virus product.
Along with being co-founder of 1x1 Media, Steve works as a venture growth advisor in Western North Carolina.
Raising Money for Your Startup: Why Fundraising is a Literary Process, Not Fi...Tearsheet
Given to a group of startup entrepreneurs at a local accelerator, this presentation is intended to provide a different -- maybe, contrarian -- viewpoint on the fundraising process.
Instead of learning finance next time you pitch an angel or VC, consider instead learning how to better tell stories.
How to avoid wasted time fundraising, and know a tire-kicker when you see one. Know your "customer" - understand how the venture business works, and what motivates VCs. Get educated on the basics of the venture fund business model, and how VCs stay in business. Find out how venture model dynamics and industry trends impact your company.
The summary of how startups get fundraising and how to measure their valuation.
This file demonstrates the methods and procedures of startup valuation.
Entrepreneurs need to put a value on their start-ups in order to raise money, and investors need to put a value on their investments to ensure an adequate return on investment. No negotiating item between entrepreneur and investor creates a wider gulf than this one. The two parties may agree on every other point but will have diametrically opposing views on what the start-up is worth and how much equity the investor should receive in exchange for his capital.
Valuation is challenging for a start-up. Since young businesses take time to become profitable, the trick of valuing start-ups is to focus on the future. If you want your start-up to be a masterpiece, you’ll need to use the right side of your brain as much as your left to determine value.
Is business valuation art or science? Is it possible to place a credible valuation on a Start-up? What is Pre-money valuation? What is Post-money valuation? How much your company worth? Are you really worth anything until you’re profitable? How to value your start-up for a VC? What are the Start-up valuation methods?
Valuation models for early-stage knowledge-based/technology companiesGregory Phipps
Slide deck on valuation models for early-stage knowledge-based/technology companies delivered to The Canadian Institute of Chartered Business Valuators - Sept 18, 2014
Check out key elements you need to know about equity and convertible notes prepared by Thibaut Claes (thibaut@startups.be). Learn more and get investor-ready via: www.startups.be/fundraisingStartups.be
Fairshare Model presentation to Mayer Brown law firm 9.10.20Karl Sjogren
Presentation on Fairshare Model to the Capital Markets group of Mayer Brown. Mayer Brown has more than 1,500 lawyers and by revenue is the 19th largest law firm in the world. Slides added to list opportunities for clients to use Fairshare Model and major legal issues to explore.
Startup Valuation: from early to mature stagesTatiana Siyanko
Methods and approached to startup and company valuations.
Please be free to send me any additions/correction proposals.
Prepared for Startup&co lecture in Freud cafe, Kyiv, April 30, 2014
Are you ready to make that leap from bootstrapping to investment capital? If you're ready to accelerate the growth of your startup, check out this presentation from Kristine Di Bacco, Associate with Fenwick and West, LLP (www.fenwick.com) and Sirk Roh, COO for Early Growth Financial Services (www.earlygrowthfinancialservices.com), which covers how to take your startup to the next level of financing -- including an in-depth look at convertible promissory notes and term sheets.
The Ultimate Investor Pitch Deck TemplateCrowdfunder
Great startups don’t fund themselves. Raising money from investors requires a great pitch, even for experienced founders with significant traction in their startup.
There’s a formula for pitching your startup that has helped startup founders raise millions.
In short, this formula involves crafting a larger story / narrative, while speaking directly to what investors are looking for and need to know about you, your company, your market, and your plan.
Valuation models for early-stage knowledge-based/technology companiesGregory Phipps
Slide deck on valuation models for early-stage knowledge-based/technology companies delivered to The Canadian Institute of Chartered Business Valuators - Sept 18, 2014
Check out key elements you need to know about equity and convertible notes prepared by Thibaut Claes (thibaut@startups.be). Learn more and get investor-ready via: www.startups.be/fundraisingStartups.be
Fairshare Model presentation to Mayer Brown law firm 9.10.20Karl Sjogren
Presentation on Fairshare Model to the Capital Markets group of Mayer Brown. Mayer Brown has more than 1,500 lawyers and by revenue is the 19th largest law firm in the world. Slides added to list opportunities for clients to use Fairshare Model and major legal issues to explore.
Startup Valuation: from early to mature stagesTatiana Siyanko
Methods and approached to startup and company valuations.
Please be free to send me any additions/correction proposals.
Prepared for Startup&co lecture in Freud cafe, Kyiv, April 30, 2014
Are you ready to make that leap from bootstrapping to investment capital? If you're ready to accelerate the growth of your startup, check out this presentation from Kristine Di Bacco, Associate with Fenwick and West, LLP (www.fenwick.com) and Sirk Roh, COO for Early Growth Financial Services (www.earlygrowthfinancialservices.com), which covers how to take your startup to the next level of financing -- including an in-depth look at convertible promissory notes and term sheets.
The Ultimate Investor Pitch Deck TemplateCrowdfunder
Great startups don’t fund themselves. Raising money from investors requires a great pitch, even for experienced founders with significant traction in their startup.
There’s a formula for pitching your startup that has helped startup founders raise millions.
In short, this formula involves crafting a larger story / narrative, while speaking directly to what investors are looking for and need to know about you, your company, your market, and your plan.
At ZebraHosts we aim to provide the right service for each and every client. Whether you're looking for a complex network of powerful servers or renting rack space, our team of experts will work with you to establish your requirements and find the solution that fits. www.zebrahosts.net
Know how venture capitalists value your deal....understand how they are compensated...see what creates value and how investors assess your "risk factors."
A great slide show presentation that provides solid answers to many of these essential questions Check out mikeklein2010.wordpress.com
Presentation on the investment basics for Startups. Essentials of startup investments, focusing on funding cycles, risk management and investor structures.
Part of the our current series of Professional Briefings for Owner/Managers of SMEs, the December briefing covered the "Dark art" of business valuation.
Investing in the cannabis industry presents some unique challenges. Seasoned cannabis investor, Micah Tapman of Canopy, goes over what investors should think about when valuing potential investments.
Understand the VC math and valuation from the investors perspective. What is fair deal and a super deal for the investee and the investor shares Madhukar Sinha, India Quotient
Startup Funding & Liquiditty Planning: best practices for SwitzerlandTobiasAngehrn
This presentation was part of a joint webinar of lexr.ch and tresio.ch.
When, and what type of funding do you really need?
Keeping cash in your company: the essence of planning
Your planning and reporting on autopilot
Startup Financing: The startup lifecycle
Term Sheet negotiations: Cash or King?
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
Yes of course, you can easily start mining pi network coin today and sell to legit pi vendors in the United States.
Here the telegram contact of my personal vendor.
@Pi_vendor_247
#pi network #pi coins #legit #passive income
#US
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Abhay Bhutada Leads Poonawalla Fincorp To Record Low NPA And Unprecedented Gr...Vighnesh Shashtri
Under the leadership of Abhay Bhutada, Poonawalla Fincorp has achieved record-low Non-Performing Assets (NPA) and witnessed unprecedented growth. Bhutada's strategic vision and effective management have significantly enhanced the company's financial health, showcasing a robust performance in the financial sector. This achievement underscores the company's resilience and ability to thrive in a competitive market, setting a new benchmark for operational excellence in the industry.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
How Does CRISIL Evaluate Lenders in India for Credit RatingsShaheen Kumar
CRISIL evaluates lenders in India by analyzing financial performance, loan portfolio quality, risk management practices, capital adequacy, market position, and adherence to regulatory requirements. This comprehensive assessment ensures a thorough evaluation of creditworthiness and financial strength. Each criterion is meticulously examined to provide credible and reliable ratings.
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
1. Elemental Economics - Introduction to mining.pdfNeal Brewster
After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
2. Objectives:
• Planning your funding strategy – key questions
• Appropriate funding sources
• The ‘Valley of Death’
• Valuing new ventures
• Structuring equity investments
• Sources of equity – Venture Capital
3. “Never buy new what can be bought
second-hand
Never buy what can be rented
Never rent what can be borrowed
Never borrow what can be begged
Never beg what can be salvaged”
The bootstrapper’s mantra….
Attributed to the late Jeff Timmons
4. Planning your funding strategy: Key Questions
1. The ‘type’ of business you are starting; because this
affects the type of money you can access
2. Your attitude towards growth and to sharing ownership
and control
3. What ‘stage of development’ our business is at
4. The risks involved and the returns expected by
financiers
5. The rate at which your business will consume cash (the
Burn Rate) and whether/when you are likely to run out of
cash
6. Your bargaining power relative to the providers of capital
5. Health Warning
Do not try to finance your business with debt
until you have reliable cash flow from sales…
6. Stage of Venture Development and Funding
Initial Ideas Feasibility Prototyping Commercialisation
Own cash; friends, family & fools
Grants (NESTA, Govt., EC etc)
Bank Loan
Business Angels, Regional Tech Funds
Venture Capital
Consultancy or other earned income to live on
Real Sales!
7. Promised land
Valley of death
Equity beak even
point (ebep)
Beak even point
Time0
+
_
Bankbalances$
Amount of finance required
Financing the journey to the promised land
8. Bankbalance£
-
0
+
Technology firm
•Large investment required
•Late break-even
•Huge upside (Microsoft)
Consulting firm
• Low investment required
• Early break-even
• Modest upside
Different Firms,
Different Profiles…
Time
9. Your bargaining power based on
time to ‘out of cash’ (OOC)
Highest
Nil
Relative
bargaining
power of
entrepreneur
versus
sources of
capital
Now 3 6 9 12+
Time to OOC (months)
10. Time to Close (TTC)
How long does it take to ‘close the deal’?
• Equity- Formal/Informal
• Debt - Secured/Unsecured
• Off Balance Sheet (leasing/contract hire)
It always takes longer than
you anticipate!!
12. The new venture valuation ‘rule’
Most VCs wish to exit by year 5 (the target year)
The annual rate of return required (discount rate)
will depend on the level of perceived risk. Let’s call it
45%
The multiple (M) of the investment required by the
investor is simply calculated as follows:
M = (1 + annual rate of return)
the target year
M = (1 + 0.45)
5
= 6.41Thus
13. The capital return (CR) is simply the multiple (M) times
the original investment (I). Lets call I £1.1m giving us:
CR = 6.41 x 1.1 = £7.05m
The percentage ownership (PO) expected by the investor will
be:
PO = Capital Return
Market Valuation (in target year)
X 100%
Our task is now to estimate a market value (MV) in year 5 (the
target year). The most common way of doing this is to use the
price to earnings ratio (PE) for comparative firms. Thus:
Market value = PE x projected earnings in target year (NPBIT)
14. Let’s assume that the PE ratio for similar quoted firms is
16 and that projected NPBIT in year 5 is £1m
The unadjusted Market Value in year 5 is thus 16 x £1.0m =
£16.0m
The required percentage ownership is, therefore:
7.05
16.00
X 100% = 44.0%
In practice, however, the PE of quoted companies may be
subject to a discount by the investor. This can easily
amount to 30% but is a matter for negotiation….Thus:
PE (adjusted) = PE – (PE x discount rate)
PE (adjusted) = 16 – (16 x 0.30) = 11.20
So
15. 7.05
11.20
X 100% = 62.9%
Thus, if a discount rate of 30% is applied the percentage ownership
required rises:
Therefore, it is in your interests to persuade the investor that:
1. The risks (managerial, market, industry and technological)
are low so that the required annual rate of return (which
reflects financial risk) can be reduced
2. That earnings in the target year are realistic so as to avoid
too heavy a discount
3. That the PE ratio is indeed comparable.
Ultimately, the value of the business is
only established by what someone is
prepared to pay…
17. The business was founded in 2005 with 10000 shares
split between Liz (7000) and Simon (3000)
At this point we do not know the value of
these shares…
After 18 months an investor, Bob, offers to invest
£18,000 in return for a 45% equity stake in the
business.
Stage 1. The first step is to calculate the pre-money valuation (its value before the investment is made):
Pre-Money Value = Amount of investment x (1 – equity stake)/equity stake
So:
£18,000 x (1-0.45)/0.45 = £22,000
Structuring the deal:
Nosh Ltd.
The share price (or value) of an unquoted
company is only known at the time the
deal is done…
18. Stage 3. Calculate the number of new shares to be issued. The deal share price is £2.20 and
£18,000 is being invested. The number of new shares will, therefore be: £18,000/£2.20 = 8182
The total number of shares is now 10,000 + 8182 = 18182
Stage 2. We now need to calculate the value of each share which is simply:
Pre-money valuation/number of shares. So, £22,000/10000 = £2.20
Note: The share price (or value) of an unquoted company is only known at the time the deal is
done…
You need to understand that equity investments
are negotiated in percentages (e.g. 45% for
£18,000) but structured using shares.
When a business raises money by selling equity
it issues new shares to the investor. The investor
does not take a proportion of the shares that
already exist (e.g. 45% of 10,000 shares)
19. In summary:
1.Calculate the ‘pre-money valuation’
2. Calculate the deal share price by dividing the pre-
money valuation by the number of shares
3. Determine the number of new shares to be issued by
dividing the investment amount by the deal share price.
70%
30%
Pre-money = £22,000
Liz Simon
38%
17%
45%
Post-money = £40,000
Liz Simon Bob
20. Exercise:
You are offering 30% of your business for £150,000.
There are 20,000 shares and you are currently the only
shareholder
1. What is the pre-money valuation?
2. What is the deal share price?
3. How many new shares will be issued to the investor?
4. What is the post-money valuation?
21. Answers:
1. Divide 0.7 by 0.3 and multiply the result by £150,000
= £350,000
2. Divide £350,000 by 20,000 shares
= £17.50
3. Divide £150,000 by £17.50
= 8571
Check: 8571 divided by 28571 = 30.0%
4. £350,000 + £150,000 = £500,000
23. Sources of Equity
• Your personal wealth (savings, equity in
house) and that of business partners
• Family (‘Love money’)
• Venture capital
• Business Angels
• Corporate partners
24. Business Angels
• Wealthy private investors, often experienced entrepreneurs
• Usually want hands-on involvement in a sector that they
understand
• £10-£250k is usual investment (some angels and angel
syndicates may do more)
• Use their friends and networks to spot opportunities
• There are approximately 18,000 active angels in the UK and
>200,000 in the USA
http//:www.bbaa.org.uk
British Business Angels Association
26. Venture Capital - Some basics
• Equity is invested in stages or rounds (seed, start-up,
expansion, etc)
• Targets and milestones are set by VCs at each stage
• Deal structures vary widely, you need to take professional
advice
• Some terms can be ‘amusing’ – e.g. WaySearch
• The VC firm may or may not require a controlling share, they
may be able to fire you!
27. Venture Capitalists are Intermediaries
$
$
$
$
VC Fund
VC Firm
Investors
Companies
e.g. Investment banks,
pension funds, wealthy
individuals
e.g. Amazon.com, e-
trade, TurboGenset
28. The Venture Capital Cycle
Fund
$100m
$1bn
Return distributed as cash or sharesInvestors in fund:
•Pension funds
•Investment funds
•Wealthy individuals
5-10 years
VC firm raises, invests and manages fund
VC firm keeps 20% of any return over 100% (Carried Interest)
+ charges a management fee
29. Even VCs don’t see 100% success
20-30% big winners (Payday…)
50% ‘Living Dead’ (money back?)
20-30% failures (total loss!)
High risk = High expected returns
(e.g. 60% ARR for early stage investments)
30. Investment Lifecycle of a Start-up
Share
Price
VC A
£
VC A + VC B
£
VC A + VC B + VC C
£
Start-up 3rd Round2nd Round
0
0 18 36 months
Opportunity
Team, IP
First prototype First production
model
Time
Down-Round
The share price
(company value) falls
at a subsequent
funding round
31. VCs think in milestones…and
dream of EXITS
“Nobody makes real money until
the exit”
32. What VCs tell us they look for….
• Clean IP portfolio - Especially in early stage tech firms
• Sector - Investors back what they know (so check out their
portfolio). They also learn from their mistakes.
• Financial indicators - Gross margin is a favourite
• Entry valuation - typically 30% less than an equivalent quoted
company (a black art…)
• Exit route - can I get out? When? How much will it be worth? (also
a black art..)
• Due diligence - any skeletons?
• The team - especially positive if they have worked together
successfully before
But in reality it depends on individual
heuristics and biases....
34. Top deal killers…
• Poor quality management - leave positions vacant rather than
recruit the wrong people
• Insufficient market size – the best plans address huge
opportunities
• Insufficient “critical mass” to the technology - VCs will not back
a one-shot wonder
• Problems with intellectual property portfolio
But….It depends heavily on the heuristics and biases of the investor
35. The voice of experience:
What some entrepreneurs
have said….
36. “Overall, it is the most soul-destroying,
degrading process any entrepreneur is
likely to go through, when rejection
becomes part of daily life….there is a sort of
Darwinian logic to the whole process”.
37. “VCs are, as a group, unprofessional,
rude and frequently unintelligent. I’ve
never met a bigger bunch of so-called
professionals who in reality are cretins,
with perhaps the exception of estate
agents and head-hunters”.
38. “Securing VC funding is bloody hard work.
VCs are a cross between weasels and
lemmings”.
40. CAMPARI : The Banker’s Maxim
• Character - ‘respectable & trustworthy’
• Ability - track record, team, potential
• Margin - % above base rate
• Purpose - expansion, rescue or buying toys
• Amount - is this realistic, too much or too little?
• Repayment - can you pay the interest and repay the principal
• Insurance - if required, is there security?
‘Honest, open and timely communication is the key to
building a relationship with your bankers. Bankers
HATE surprises’!