Venture Capital Unlocked (Stanford) / Venture Capital 2.0Dave McClure
slides for my "Venture Capital 2.0" opening talk at Stanford School Continuing Studies, VC101 class "Venture Capital Unlocked" #VCunlocked #500startups
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.
Tech and Venture Capital in the Time of Corona Dave McClure
Isomer Capital is a private investment firm based in London that focuses exclusively on venture capital investments in European companies. It makes primary investments in VC funds as well as direct co-investments in companies. It has notable portfolio unicorns, investments in over 30 funds across 6 countries, and underlying portfolio companies. Venture capital has delivered strong returns over the past 25 years, outperforming other major asset classes like stocks and bonds. The European VC market has also outperformed the US market over the past 20 years based on Cambridge Associates indices.
The document provides information for startups on fundraising from venture capital investors in Poland. It discusses the stages of startup development and when it is best to seek investment. Sources of capital at different stages are outlined, including typical investment amounts and share percentages. An overview is given of how venture capital funds operate, how they evaluate projects, and the investment process. Advice is provided on preparing investment materials like a teaser, presentation, and financial plan. Golden rules are outlined for finding investors and having successful investment meetings and negotiations.
The document provides information on valuation methods for startups. It discusses questions founders may have about valuation, outlines various valuation methods including cost, income and market-based approaches, and provides examples of how valuations are determined for startups at different stages. Valuation is presented as a multifaceted process that considers both tangible and intangible factors, and is driven by the team, funding needs, deal terms, and negotiation between founders and investors.
Basic concepts of marketing and branding for venture capital. Emphasis on competitive differentiation (aka "How are you different/better than other VCs in your category?"). Specific focus on defining areas of "value add" that aren't BS.
Can you measure the value of a company relying entirely on financial tools and models? Should you ignore the story and vision behind the numbers? We say that an interplay between the numbers and the story produces the most reliable valuation.
For more check out: https://www.equidam.com/defend-your-valuation/
Find out your company value in minutes on: https://www.equidam.com/
Venture Capital Unlocked (Stanford) / Venture Capital 2.0Dave McClure
slides for my "Venture Capital 2.0" opening talk at Stanford School Continuing Studies, VC101 class "Venture Capital Unlocked" #VCunlocked #500startups
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.
Tech and Venture Capital in the Time of Corona Dave McClure
Isomer Capital is a private investment firm based in London that focuses exclusively on venture capital investments in European companies. It makes primary investments in VC funds as well as direct co-investments in companies. It has notable portfolio unicorns, investments in over 30 funds across 6 countries, and underlying portfolio companies. Venture capital has delivered strong returns over the past 25 years, outperforming other major asset classes like stocks and bonds. The European VC market has also outperformed the US market over the past 20 years based on Cambridge Associates indices.
The document provides information for startups on fundraising from venture capital investors in Poland. It discusses the stages of startup development and when it is best to seek investment. Sources of capital at different stages are outlined, including typical investment amounts and share percentages. An overview is given of how venture capital funds operate, how they evaluate projects, and the investment process. Advice is provided on preparing investment materials like a teaser, presentation, and financial plan. Golden rules are outlined for finding investors and having successful investment meetings and negotiations.
The document provides information on valuation methods for startups. It discusses questions founders may have about valuation, outlines various valuation methods including cost, income and market-based approaches, and provides examples of how valuations are determined for startups at different stages. Valuation is presented as a multifaceted process that considers both tangible and intangible factors, and is driven by the team, funding needs, deal terms, and negotiation between founders and investors.
Basic concepts of marketing and branding for venture capital. Emphasis on competitive differentiation (aka "How are you different/better than other VCs in your category?"). Specific focus on defining areas of "value add" that aren't BS.
Can you measure the value of a company relying entirely on financial tools and models? Should you ignore the story and vision behind the numbers? We say that an interplay between the numbers and the story produces the most reliable valuation.
For more check out: https://www.equidam.com/defend-your-valuation/
Find out your company value in minutes on: https://www.equidam.com/
This document summarizes the Global Frontier Technology Fund, which invests in early-stage technology companies around the world. The fund highlights that 85% of future GDP growth will occur outside the US and that it has a network of over 300,000 founders building companies in 49 countries. It invests in sectors like AI, blockchain, IoT, and financial technology. The fund also has partnerships to help portfolio companies scale globally.
Delivering Outstanding VC Results with DAUlu Ventures
Slides of guest lecture by Dr. Clint Korver, Partner, Ulu Ventures, at Stanford University's class Professional Decision Analysis (MS&E 352) on Feb 27, 2018
David Fernquist of LPL Financial provides wealth management services including comprehensive planning, investment management, reporting and monitoring. The document outlines LPL Financial's focus on understanding each client's unique situation and goals. It describes the various planning, advisory, investment research and portfolio construction services offered to help clients achieve their objectives and transfer wealth effectively.
Dave McClure, a founding partner at 500 Startups, gave a presentation on technology trends in 2017. He discussed how startups have become cheaper, faster, and better. He also talked about how VCs are making lots of small bets through many new, small funds. McClure highlighted several investment areas including fintech, AI, AR/VR, blockchain, and other new technologies. He emphasized 500 Startups' strategy of making many small investments to find the next big winners.
Lean startup, customer development, and the business model canvasgistinitiative
The document discusses key concepts in lean startup methodology, including building business models focused on customer development rather than business plans, developing minimum viable products to test hypotheses, and using an iterative build-measure-learn process. It provides examples of how startups should focus on building products that solve customer pains and create gains rather than features, and emphasizes conducting customer interviews to gather evidence and test hypotheses about the business model.
We are big advocates of transparency at Seedcamp and understand first hand just how tough the fundraising process can be. It's not just startups who go through this but funds too. In the spirit of openness, we're sharing the deck we used to go out to investors for Seedcamp Fund IV.
Read more about our plans to invest in 100 new European startups with our biggest and boldest fund yet over on our blog: http://seedcamp.com/seedcamp-fund-iv-announcement/
This document provides guidance on raising seed capital from venture capital firms and other investors. It discusses the basics of venture capital and seed stage funding. Key points include:
- Seed funding ranges from $50k-$1.5M and is used to build an initial product and validate the business idea. It discusses various sources of seed capital including angels, accelerators, seed funds, and some VCs.
- Preparing for a fundraise involves launching a minimum viable product to prove traction, finding experienced advisors, crafting an investor pitch deck, and networking within the startup community.
- When pitching investors, the goals are to excite them about the opportunity and make them fear missing out. The pitch should
How to VC: Creating a VC fund portfolio modelDave McClure
This article aims to help VCs figure out how to size a venture capital fund, how many companies to include in your portfolio, and when and how to do follow-on investments. Most VCs aim to make a 3X (net) return on initial fund capital, at a ~20% net IRR. Note however, likely less than 10% of most VC funds achieve that goal.
This document introduces an updated framework called "Pirate Metrics 2.0" for visualizing and measuring key business metrics. The framework models a business as a "Customer Factory" that turns unaware visitors into happy, paying customers through acquisition, activation, retention, revenue, and referral. It depicts the customer journey in a nonlinear graph and identifies two "hotspots" - nodes with the most lines entering or leaving. This helps simplify complex concepts and identify bottlenecks to growth. The framework also shows three "Engines of Growth" - paid, sticky, and referral - to help businesses focus on scaling.
The document provides guidance on when and how much venture capital early-stage companies should raise. It recommends initially raising small amounts from friends and family, using that to build a product and pilot customers. It then suggests raising an angel/seed round and keeping costs low for the first year to prove scalability. It outlines when companies should consider venture capital versus other options. The document also provides tips on pitching VCs, including optimal fundraising seasons, pitch deck structure, and services The Rudder Group can provide to help companies raise capital.
O capítulo apresenta as principais fontes de financiamento do capital de giro, incluindo fontes operacionais como fornecedores, salários e adiantamentos de clientes, e fontes financeiras como bancos comerciais, financeiras e operações de desconto de duplicatas. Também discute os principais produtos e serviços oferecidos pelas instituições financeiras para o financiamento de curto prazo, como empréstimos, financiamentos e garantias.
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
This document provides an overview of funding hardware startups from RRE Ventures. It discusses the shift from Hardware 1.0 to 2.0 and the new opportunities in the space. The basics of venture capital are covered, as well as tips for hardware founders on preparing to raise funding. This includes building an MVP, finding advisors, crafting a pitch deck and story, targeting the right investors, and managing the fundraising process. Post-investment expectations and resources for founders are also summarized. The document aims to equip hardware entrepreneurs with knowledge for securing VC funding.
Venture Studios - The Future of Venture Capital and Startup CreationJazeerJamal3
This white paper provides a comprehensive analysis
of the venture studio model, highlighting its key
operational elements and distinguishing it from
other ecosystem enablers. Through this analysis,
readers will gain a thorough understanding of the
venture studio model's potential to transform the
entrepreneurial landscape. The paper aims to
demonstrate the effectiveness of the venture studio
model and showcase how it can serve as a
game-changing innovation engine.
This document provides an overview of startup valuation and fundraising strategies. It discusses financial projections, exit strategies, and valuation methods. Key points include:
- Financial projections should include revenue models, customer projections, costs, and cash flow budgets to support fundraising goals.
- An exit strategy outlines potential acquisitions, IPOs, or remaining independent to help investors evaluate return on investment.
- Comparable company analyses use multiples like revenue or EBITDA to estimate startup valuation based on exited companies.
The document provides templates and considerations for building financial models, researching comparable acquisitions, and determining valuation to support fundraising efforts.
Startups are naturally risky, and a startup valuation is probably closer to an art than a science. However, it can be made less based on “gut feelings” by carefully assessing the several elements that would have the strongest impact on the venture success. In this document, we have identified 7 key elements that we believe investors should look for, when evaluating a startup: team, problem, solution, strategy and marketing, scalability, strategic fit, return vs. risk.
How To Create The Perfect Start-Up Pitch Deck The right Way for Entrepreneurs || From a VC perspective
Founders who deeply follow those recommendations will have better chance to build a defining pitch deck for VCs.
If you think you have a good pitch, send it through my way at eharfouche@polytechventures.ch
SE Asia - The most attractive opportunity in the booming Asian Tech LandscapeJungle Ventures
In this slideshow, we look at the key ingredients which make for good venture ecosystems, and find that South East Asia scores impressively on all fundamental factors, higher than India in almost all categories and even better than China in a few.
We take a deeper look at various data points including addressable population, spending power, infrastructure, technology adoption and usage, business and startup ecosystem quality. Our inference as a result of all these data points is that SE Asian markets present a tremendous opportunity for startups led value creation.
We conclude that there is an extra ordinary opportunity for VCs to back the leading Founders in SE Asia. Given the strong fundamentals, better consumer demographics, the funding gap and the presence of only few local and active VCs, SE Asia presents very attractive dynamics for Venture Capitalists (lower competition for companies and VCs, rational entry valuations, favourable deal timelines, founders’ focus on limited cash burn).
Bauer Industries is evaluating a proposal to build a new truck manufacturing plant and has prepared cash flow projections over 10 years showing revenues of $100 million annually, manufacturing and marketing expenses totaling $45 million, and depreciation of $15 million, resulting in estimated annual EBIT of $40 million and unlevered net income of $26 million. Bauer plans to use a 12% cost of capital to evaluate the project's net present value and determine if the project should be accepted.
EBITDA and Other Scary Words (Series: MBA Boot Camp 2020) Financial Poise
This webinar explores the ins and outs of financial language and how you can navigate the seeming labyrinth of a language that can sound foreign and in some ways counterintuitive. This webinar teaches the correct use of EBIT, EBITDA and EBITDAR while also dealing with concepts like Cap Rate vs. Capital Cost. This webinar also sheds light on issues with ROI and Payback among other valuation tools and explains what a Cash Conversion Cycle looks like for your business.
To listen to this webinar on demand, go to: https://www.financialpoise.com/financial-poise-webinars/ebitda-and-other-scary-words-2020/
This document summarizes the Global Frontier Technology Fund, which invests in early-stage technology companies around the world. The fund highlights that 85% of future GDP growth will occur outside the US and that it has a network of over 300,000 founders building companies in 49 countries. It invests in sectors like AI, blockchain, IoT, and financial technology. The fund also has partnerships to help portfolio companies scale globally.
Delivering Outstanding VC Results with DAUlu Ventures
Slides of guest lecture by Dr. Clint Korver, Partner, Ulu Ventures, at Stanford University's class Professional Decision Analysis (MS&E 352) on Feb 27, 2018
David Fernquist of LPL Financial provides wealth management services including comprehensive planning, investment management, reporting and monitoring. The document outlines LPL Financial's focus on understanding each client's unique situation and goals. It describes the various planning, advisory, investment research and portfolio construction services offered to help clients achieve their objectives and transfer wealth effectively.
Dave McClure, a founding partner at 500 Startups, gave a presentation on technology trends in 2017. He discussed how startups have become cheaper, faster, and better. He also talked about how VCs are making lots of small bets through many new, small funds. McClure highlighted several investment areas including fintech, AI, AR/VR, blockchain, and other new technologies. He emphasized 500 Startups' strategy of making many small investments to find the next big winners.
Lean startup, customer development, and the business model canvasgistinitiative
The document discusses key concepts in lean startup methodology, including building business models focused on customer development rather than business plans, developing minimum viable products to test hypotheses, and using an iterative build-measure-learn process. It provides examples of how startups should focus on building products that solve customer pains and create gains rather than features, and emphasizes conducting customer interviews to gather evidence and test hypotheses about the business model.
We are big advocates of transparency at Seedcamp and understand first hand just how tough the fundraising process can be. It's not just startups who go through this but funds too. In the spirit of openness, we're sharing the deck we used to go out to investors for Seedcamp Fund IV.
Read more about our plans to invest in 100 new European startups with our biggest and boldest fund yet over on our blog: http://seedcamp.com/seedcamp-fund-iv-announcement/
This document provides guidance on raising seed capital from venture capital firms and other investors. It discusses the basics of venture capital and seed stage funding. Key points include:
- Seed funding ranges from $50k-$1.5M and is used to build an initial product and validate the business idea. It discusses various sources of seed capital including angels, accelerators, seed funds, and some VCs.
- Preparing for a fundraise involves launching a minimum viable product to prove traction, finding experienced advisors, crafting an investor pitch deck, and networking within the startup community.
- When pitching investors, the goals are to excite them about the opportunity and make them fear missing out. The pitch should
How to VC: Creating a VC fund portfolio modelDave McClure
This article aims to help VCs figure out how to size a venture capital fund, how many companies to include in your portfolio, and when and how to do follow-on investments. Most VCs aim to make a 3X (net) return on initial fund capital, at a ~20% net IRR. Note however, likely less than 10% of most VC funds achieve that goal.
This document introduces an updated framework called "Pirate Metrics 2.0" for visualizing and measuring key business metrics. The framework models a business as a "Customer Factory" that turns unaware visitors into happy, paying customers through acquisition, activation, retention, revenue, and referral. It depicts the customer journey in a nonlinear graph and identifies two "hotspots" - nodes with the most lines entering or leaving. This helps simplify complex concepts and identify bottlenecks to growth. The framework also shows three "Engines of Growth" - paid, sticky, and referral - to help businesses focus on scaling.
The document provides guidance on when and how much venture capital early-stage companies should raise. It recommends initially raising small amounts from friends and family, using that to build a product and pilot customers. It then suggests raising an angel/seed round and keeping costs low for the first year to prove scalability. It outlines when companies should consider venture capital versus other options. The document also provides tips on pitching VCs, including optimal fundraising seasons, pitch deck structure, and services The Rudder Group can provide to help companies raise capital.
O capítulo apresenta as principais fontes de financiamento do capital de giro, incluindo fontes operacionais como fornecedores, salários e adiantamentos de clientes, e fontes financeiras como bancos comerciais, financeiras e operações de desconto de duplicatas. Também discute os principais produtos e serviços oferecidos pelas instituições financeiras para o financiamento de curto prazo, como empréstimos, financiamentos e garantias.
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
This document provides an overview of funding hardware startups from RRE Ventures. It discusses the shift from Hardware 1.0 to 2.0 and the new opportunities in the space. The basics of venture capital are covered, as well as tips for hardware founders on preparing to raise funding. This includes building an MVP, finding advisors, crafting a pitch deck and story, targeting the right investors, and managing the fundraising process. Post-investment expectations and resources for founders are also summarized. The document aims to equip hardware entrepreneurs with knowledge for securing VC funding.
Venture Studios - The Future of Venture Capital and Startup CreationJazeerJamal3
This white paper provides a comprehensive analysis
of the venture studio model, highlighting its key
operational elements and distinguishing it from
other ecosystem enablers. Through this analysis,
readers will gain a thorough understanding of the
venture studio model's potential to transform the
entrepreneurial landscape. The paper aims to
demonstrate the effectiveness of the venture studio
model and showcase how it can serve as a
game-changing innovation engine.
This document provides an overview of startup valuation and fundraising strategies. It discusses financial projections, exit strategies, and valuation methods. Key points include:
- Financial projections should include revenue models, customer projections, costs, and cash flow budgets to support fundraising goals.
- An exit strategy outlines potential acquisitions, IPOs, or remaining independent to help investors evaluate return on investment.
- Comparable company analyses use multiples like revenue or EBITDA to estimate startup valuation based on exited companies.
The document provides templates and considerations for building financial models, researching comparable acquisitions, and determining valuation to support fundraising efforts.
Startups are naturally risky, and a startup valuation is probably closer to an art than a science. However, it can be made less based on “gut feelings” by carefully assessing the several elements that would have the strongest impact on the venture success. In this document, we have identified 7 key elements that we believe investors should look for, when evaluating a startup: team, problem, solution, strategy and marketing, scalability, strategic fit, return vs. risk.
How To Create The Perfect Start-Up Pitch Deck The right Way for Entrepreneurs || From a VC perspective
Founders who deeply follow those recommendations will have better chance to build a defining pitch deck for VCs.
If you think you have a good pitch, send it through my way at eharfouche@polytechventures.ch
SE Asia - The most attractive opportunity in the booming Asian Tech LandscapeJungle Ventures
In this slideshow, we look at the key ingredients which make for good venture ecosystems, and find that South East Asia scores impressively on all fundamental factors, higher than India in almost all categories and even better than China in a few.
We take a deeper look at various data points including addressable population, spending power, infrastructure, technology adoption and usage, business and startup ecosystem quality. Our inference as a result of all these data points is that SE Asian markets present a tremendous opportunity for startups led value creation.
We conclude that there is an extra ordinary opportunity for VCs to back the leading Founders in SE Asia. Given the strong fundamentals, better consumer demographics, the funding gap and the presence of only few local and active VCs, SE Asia presents very attractive dynamics for Venture Capitalists (lower competition for companies and VCs, rational entry valuations, favourable deal timelines, founders’ focus on limited cash burn).
Bauer Industries is evaluating a proposal to build a new truck manufacturing plant and has prepared cash flow projections over 10 years showing revenues of $100 million annually, manufacturing and marketing expenses totaling $45 million, and depreciation of $15 million, resulting in estimated annual EBIT of $40 million and unlevered net income of $26 million. Bauer plans to use a 12% cost of capital to evaluate the project's net present value and determine if the project should be accepted.
EBITDA and Other Scary Words (Series: MBA Boot Camp 2020) Financial Poise
This webinar explores the ins and outs of financial language and how you can navigate the seeming labyrinth of a language that can sound foreign and in some ways counterintuitive. This webinar teaches the correct use of EBIT, EBITDA and EBITDAR while also dealing with concepts like Cap Rate vs. Capital Cost. This webinar also sheds light on issues with ROI and Payback among other valuation tools and explains what a Cash Conversion Cycle looks like for your business.
To listen to this webinar on demand, go to: https://www.financialpoise.com/financial-poise-webinars/ebitda-and-other-scary-words-2020/
EBITDA and Other Scary Words (Series: MBA Boot Camp)Financial Poise
This webinar explores the ins and outs of financial language and how you can navigate the seeming labyrinth of a language that can sound foreign and in some ways counterintuitive. This webinar teaches the correct use of EBIT, EBITDA and EBITDAR while also dealing with concepts like Cap Rate vs. Capital Cost. This webinar also sheds light on issues with ROI and Payback among other valuation tools and explains what a Cash Conversion Cycle looks like for your business.
To view the accompanying webinar, go to:https://www.financialpoise.com/financial-poise-webinars/ebitda-and-other-scary-words-2021/
Stepping into a role which requires business finance knowledge? Here is a short guide offering advice, tools, and expertise that you will need to equip yourself with to be successful. Check out our Diploma in Business Finance for more.
Using Financial Forecasts to Advise Business - Financial Forecasting 101 - Re...Irma Miller
This document provides an overview of financial forecasting and discusses key concepts such as planning, budgeting, and forecasting. It begins with two examples of how forecasting can positively or negatively impact a company's financial performance. It then discusses the relationships between planning, budgeting, and forecasting and how they differ. The document provides tips for explaining forecasting to non-financial executives and discusses important considerations like timelines, costs vs. benefits, and sensitivity analysis.
The document provides an overview of investment readiness and valuation for startups. It discusses key concepts such as understanding market opportunities, financial projections, stages of funding, and common valuation methods. The goal is to help entrepreneurs prepare effectively to attract investors and secure funding by demonstrating an accurate valuation of their business based on its potential for growth and profitability. Key steps include understanding what investors consider important, assessing the financial health and moneymaking potential of the business, and learning from others who have successfully raised startup capital.
9 B. Specific valaution-converted-converted (1) (1).pptxPraveen362297
This document discusses various valuation methods that can be used for start-up companies. It describes 4 main methods:
1) Venture capital method which estimates expected return on investment and exit value to determine post-money valuation.
2) First Chicago method which creates financial projections under different scenarios and applies comparable company multiples to estimate valuation.
3) Scorecard method which applies weightings to qualitative and quantitative factors to calculate a weighted average valuation.
4) Berkus method which assigns valuation ranges based on progress in 5 elements: idea, prototype, management team, strategic relationships, and sales. The document provides examples and limitations of these start-up valuation methods.
Benefits of startup valuation and Important methodsEqvista
This document discusses 7 methods for valuing a startup company: 1) Berkus Method, 2) Comparable Transactions Method, 3) Scorecard Valuation Method, 4) Cost-to-Duplicate Approach, 5) Risk Factor Summation Method, 6) Discounted Cash Flow Method, and 7) Venture Capital Method. It provides a brief overview of how each method works and the key factors considered. The main benefits of startup valuation are determining the company's actual worth, aiding decision making, setting goals, securing insurance, and determining share value.
The document outlines an agenda for a startup leadership program on financial modeling. It includes presentations on what a financial model is, how to build an income statement, balance sheet, and cash flow statement. It discusses how financial models are useful for entrepreneurs and startups by providing an analytical lens, operating roadmap, risk assessment, scenario exploration, and as a pitch tool for investors. The document also covers best practices for model construction and common business metrics and economic indicators analyzed in financial models.
The document provides information on valuation methods for startups. It discusses questions founders may have about valuation, outlines common valuation methods including cost, income and market-based approaches, and provides examples of how valuations are determined for startups at different stages. Valuation is presented as a multifaceted process that considers both tangible and intangible factors, and depends on the specific investor, deal terms, and negotiation between the founder and investor.
This document provides an overview of a seminar on formulating strategies and action plans for financial stability during slow economic periods. The seminar agenda covers available government assistance programs, managing late payments, tax computation, and a question and answer session. The presentation discusses analyzing financial statements, developing a target financial situation and steps to close the gap between the current and target situations. It also outlines government grant programs for small businesses, including the Innovation and Capability Voucher and Capability Development Grant. The presentation provides examples of how these grants can be used to improve financial management and support business growth.
The document discusses strategy and management control systems. It defines key tasks in strategic management like defining mission/objectives, crafting/implementing strategy, and evaluating performance. It also discusses rational and emergent perspectives on strategy. Under rational perspective, it explains developing mission/objectives and provides BBC and Disney's purpose statements as examples. Finally, it discusses levels of strategy including corporate, business, and functional strategies.
A compilation of all the articles and sources I have found useful to value early stage (including pre-revenue) startups.
Sources of compiled information:
• UpCounsel https://www.upcounsel.com/startup-valuation-methods
• http://billpayne.com/wp-content/uploads/2011/01/Scorecard-Valuation-Methodology-Jan111.pdf
• https://www.investopedia.com/terms/d/dcf.asp
• https://en.wikipedia.org/wiki/Cost_of_capital
• http://andrewchen.co/how-to-measure-if-users-love-your-product-using-cohorts-and-revisit-rates/
• http://www.perceptualedge.com/articles/guests/intro_to_cycle_plots.pdf
The document discusses various methods for valuing companies, including cost-based methods like book value and replacement cost, income-based methods like earnings capitalization and discounted cash flow, and market-based methods. It notes that valuation depends on factors like management, performance, projections, industry, and the transaction context. The valuation process involves considering financial and non-financial factors, using multiple models, and arriving at a valuation range. Special situations like multi-business companies, M&A, and cyclic businesses require tailored applications of valuation models.
The KPI - Cash Flow Modeling and Projections (Series: MBA Boot Camp 2020) Financial Poise
You can chase a lot of financial measures of your business, but nothing stacks up to cash flow. Like a boat captain on a rough sea, being able to see what is coming at you financially is absolutely invaluable. Cash flow models are the absolute go-to tool for reviewing companies in distress, yet they are also invaluable to venture capitalist who must manage long range investments as well as fast growth. This webinar discusses the basic components of a cash flow model, why it is weekly and not monthly and why 13 weeks is the usual length. This webinar also discusses what type of data is best for making an efficient and practical cash flow model, as well as best practices for reporting and pitfalls associated with modeling and balance roll forwards.
Tudor Mafteianu (Blu Capital Partners) - What Drives the Value of Your Business?Techsylvania
The document discusses how to maximize the value of a business. It explains that value is driven both intrinsically, such as by the quality of products, growth, and management, and extrinsically, such as investor sentiment and availability of capital. The document provides tips on understanding value drivers, improving business metrics, and structuring deals appropriately in order to secure and unlock maximum value. Potential exit routes discussed include strategic sales, IPOs, and raising equity or debt.
Financefornonfinance 130116104722-phpapp01 (1)Kristi Anderson
This document provides an overview of key concepts in finance and financial management. It discusses the basics of financial management, understanding financial statements including the balance sheet, income statement, and cash flow statement. It also covers financial analysis and decision making, explaining various liquidity, profitability, and solvency ratios that can be used to analyze a company's financial health and make informed business decisions. The document emphasizes that financial analysis allows managers to make more accurate, precise decisions by reasonably understanding and analyzing financial statements.
Before engaging in a business deal, due diligence makes sure a corporation is competent to manage risk. There are two main justifications why businesses should perform due diligence . A company should confirm that a business is what it purports to be before engaging in trade with an Indian company.
TO KNOW MORE : https://vakilsearch.com/financial-due-diligence-report
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During the budget session of 2024-25, the finance minister, Nirmala Sitharaman, introduced the “solar Rooftop scheme,” also known as “PM Surya Ghar Muft Bijli Yojana.” It is a subsidy offered to those who wish to put up solar panels in their homes using domestic power systems. Additionally, adopting photovoltaic technology at home allows you to lower your monthly electricity expenses. Today in this blog we will talk all about what is the PM Surya Ghar Muft Bijli Yojana. How does it work? Who is eligible for this yojana and all the other things related to this scheme?
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5. What is finance
5
Finance describes the management, creation and study of money, banking,
credit, investments, assets and liabilities that make up financial systems, as well
as the study of those financial instruments.
To put it in a nutshell, Finance is the Study of Value.
6. What is Value
6
The monetary, material or assessed worth of an asset, good or service.
Value is used to quantify the worth of something, and different types of value
can be applied to explain various situations
Value can be perceived, as in the way consumers perceive the ability of a good
or service to meet their needs and their willingness to pay for the good or
service.
7. Types of Value
7
Market Value
Liquidation value
Book Value
Replacement Value
Historical Value
Intrinsic value
13. Liquidation Value Method
13
This may not be a very wise tool to measure a profitable company as it ignores
the future growth potential.
This method can be considered to evaluate a dying company as a potential
takeover and sell down for profit making.
15. Price-to-Earnings (P/E)
15
Pros
Easy to use
Most commonly used measure of valuation
Studies have indicated a strong correlation to long-term returns.
Cons
Cannot be used for firms when they report a loss in earnings.
Earnings can be volatile given various inputs.
Earnings are more easily manipulated by managements.
16. Price-to-Book Value (P/BV)
16
Pros
Tends to be a stable valuations metric because balance sheets do not fluctuate much
quarter-to-quarter.
Can be used as a valuation metric even when firms report an EPS loss.
Good metric to value firms in distress
Cons
Does not take into account the relative asset size when comparing firms.
Accounting metrics can skew the results.
Book value is not an accurate measure of actual market value.
17. Price-to-Sales (P/S)
17
Pros
Sales tend to be a realistic number and are not influenced as heavily by accounting
issues.
Good metric to value firms in distress.
Can be used as a valuation metric when firms report a loss.
Cons
Sales do not always translate to profits which can leave out the cost component.
Difficult to value companies with different cost structures.
Accounting issues related to revenue recognition can still alter sales.
18. Price-to- Cash Flow (P/CF)
18
Pros
Cash flow is a truer metric of a company's results in comparison to earnings.
It is more difficult for managements to manipulate cash flow
Tends to be less volatile than earnings.
Studies have indicated that it is a reliable metric over the longer-term.
Cons
Some items are not included, such as non-cash revenue.
19. EV / EBITDA
19
Pros
This ratio is often preferred to other return metrics because it evens out
differences in taxation, capital structure and asset
Cons
The EV/EBITDA ratio is less widely published than the P/E ratio, making
comparisons difficult.
20. Absolute Valuation
20
Absolute Valuation Models try to determine a company's intrinsic worth based
on its estimated future cash flows discounted to their present value.
21. Absolute Valuation
21
Pros
The intrinsic value of an equity can be justified.
Relies on free cash flows rather than accounting figures.
Different variations of the model account for different growth rates (e.g.
multistage models).
Cons
Based on assumptions on inputs (growth rate, required return on equity, and
future cash flows).
Difficult to forecast cash flows in cyclical businesses.
22. Option Based Valuation (Real Options Analysis)
22
A real option itself, is the right — but not the obligation — to undertake certain
business initiatives, such as deferring, abandoning, expanding, staging, or
contracting a capital investment project.
First, you must figure out the full range of possible values for the underlying
asset.... This involves estimating what the asset's value would be if it existed
today and forecasting to see the full set of possible future values... [These]
calculations provide you with numbers for all the possible future values of the
option at the various points where a decision is needed on whether to continue
with the project
24. What is it About
24
Basic finance: ‘risk versus reward’
In startup terminology, it’s: ‘traction versus market size’.
Market traction = market adoption
Traction is evidence that your product or service has started that “hockey-
stick” adoption rate which implies a large market, a valid business model and
sustainable growth.
25. What do you have?
25
Assets:
Applications, Product, Cash Flow, Patents, Customers/Users, Partnerships
KPI’s
user growth rate (monthly or weekly), customer success rate, referral rate, daily usage
statistics
Team
Having solid talent in place is something that investors value highly.
What have you built together in the past? Have you ever launched or ran a startup company
in the past? Do you have domain expertise? Have you had a successful exit? Did you work for
a prestigious company or go to an elite school?
If you have none of the above, you haven’t launched anything yet!
27. Berkus Method
27
Dave Berkus is an active angel investor and lifelong entrepreneur. He came up
with the following early-stage valuation model for startups:
28. Risk Factor Summation Method
28
This model takes a broader approach to valuing your company by breaking the
risk down into 12 sub-categories. They are as follows:
1. management 5. sales and marketing risk 9. litigation risk
2. stage of the business 6. funding/capital raising risk 10. international risk
3. legislation/political risk 7. competition risk 11. reputation risk
4. manufacturing risk 8. technology risk
12. potential lucrative
exit
29. Risk Factor Summation Method - Continued
29
Each sub-category of risk is assigned a grade of ++, +, 0 (neutral), -, or --. The
scale for scoring each element is:
◦ ++ = add $500 thousand
◦ + = add $250 thousand
◦ 0 = do nothing
◦ - = subtract $250 thousand
◦ -- = subtract $500 thousand
31. Score Card Valuation Methodology
31
For pre-revenue startup ventures:
First, use the average valuation of recently funded companies in the region to establish a pre-
money valuation of the target.
Then Adjust the average based on some factors:
strength of the management team 0-30%
Size of the opportunity 0-25%
Product/Technology 0-15%
Competitive Environment 0-10%
Marketing/Sales Channels/Partnerships 0-5%
Need for additional investments 0-5%
Others 0-5%
Then compare the target company with the norm in each category.
32. Score Card Valuation Methodology – An Example
32
Average pre-money valuation for the pre-revenue firms in the region is $1.5
million.
Consider the following factors:
33. Score Card Valuation Methodology – An Example
33
Comparing the target company with the norm:
1.0750 * 1.5 = 1.61
34. Venture Capital Method
34
Return on Investment (ROI) = Terminal (or Harvest) Value ÷ Post-money Valuation
Post-money Valuation = Terminal Value ÷ Anticipated ROI
The selling price can be estimated based on the revenues and estimated earnings in
the year of the sale from industry-specific statistics.
Anticipated ROI: Angel investing is risky business. Based on the Wiltbank Study,
investors should expect a 27% IRR in six years. Most angels understand that half of new
ventures fail and the best an investor can expect from nine of ten investments is return
of capital for a portfolio of ten. Consequently, the tenth investment must be a home run
of 20X or more. Since investors do not know which of the ten will be the homerun, all
investments must demonstrate the possibility of a 10X-30X return.
35. Venture Capital Method – An Example
35
A period of 5-8 years after investment, let’s assume 6 years.
Anticipated revenues of $20 million in the harvest year and after-tax earnings
of 15%, or $3 million.
A 15X P/E ratio leads to a Terminal Value of $45 million. A 2X P/S ratio leads to a
Terminal Value of $40 million. Let’s split the difference. In this example, our
Terminal Value is $42.5 million.
A Capital need of $500,000.
36. Venture Capital Method – An Example
36
Post-money Valuation = Terminal Value ÷ Anticipated ROI = $42.5 million ÷ 20X
Post-money Valuation = $ 2.125 million.
Pre-money Valuation = Post-money Valuation – Investment = $2.125 – $0.5
million.
Pre-money Valuation = $1.625 million
38. Baseline valuation figure
Follow these steps to calculate a baseline valuation figure:
Calculate your revenue run rate (RRR), which is the most recent month’s sales
times 12.
Look at your historical growth curve to calculate monthly, or better yet, your
weekly revenue growth rate.
Calculate an adjusted RRR based on your growth rate by applying the growth
rate to the most recent month’s sales and extrapolating out over the course of a
year.
Multiply your adjusted RRR by a factor of ten to put yourself ‘in the ballpark’ of a
rational valuation figure.
38