TiE Masterclass: Valuation for Startups
This 3 part workshop conducted by Anjana Vivek, Founder Director of Venture Bean Consulting, Parag Dhol, MD, Inventus Capital Partners & Pavan Sondur, CEO & Cofounder, UNBXD
Valuation for Startups - What is your Start-up worth?TiE Bangalore
TiE Masterclass: Valuation for Startups
This 3 part workshop conducted by Anjana Vivek, Founder Director of Venture Bean Consulting, Parag Dhol, MD, Inventus Capital Partners & Pavan Sondur, CEO & Cofounder, UNBXD
How much is your start-up worth? How much capital can you raise? How much equity will you have to give up? What will investor be looking at? What is too little? What is too much?
5 slides, quick and dirty job, far from perfect, but a good starting point.
FEEDBACK WELCOME
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.
Valuation for Startups - What is your Start-up worth?TiE Bangalore
TiE Masterclass: Valuation for Startups
This 3 part workshop conducted by Anjana Vivek, Founder Director of Venture Bean Consulting, Parag Dhol, MD, Inventus Capital Partners & Pavan Sondur, CEO & Cofounder, UNBXD
How much is your start-up worth? How much capital can you raise? How much equity will you have to give up? What will investor be looking at? What is too little? What is too much?
5 slides, quick and dirty job, far from perfect, but a good starting point.
FEEDBACK WELCOME
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.
Know Your Valuation for Equity Compensation (And Avoid the Perils of 409A)The Capital Network
If you are a CEO or a CFO of a high growth startup, it is vital to understand how to value your company correctly.
Here is a quick list of questions this lunch will help you answer:
Do you offer or are you planning to offer your employees stock options? Do you know the difference between ISOs and non-ISOs? Do you understand the general valuation concepts and approaches that the IRS has outlined, especially as they apply to early-stage companies? Did you know that if you run afoul of the 409A rules, your employees could have an unpleasant tax surprise and that some of that responsibility could revert back to you as the employer? Do you know if and when you need to engage an outside expert to assist with a valuation?
This is a limited seat lunch to teach issues of valuation for equity compensation and ask specific questions about your company.
Experts:
– Alicia Amaral, Scalar Analytics
– Scott Goodwin, Wolf & Company
How do you value a pre-revenue startup?
This is an introduction to some of the methods that are typically used to value a startup, detailing what is important to establish before carrying out a valuation and how it relates to the chosen fundraising strategy and your local market.
In this workshop, Jeff Faust, CVA will discuss how to prepare for a valuation as a startup, as well as commonly used valuation methods in various domains, including venture capital.
Jeff will take Q&A throughout the presentation.
How do you figure out how much money you need, and when? We’ll look at a case study and talk P&L to help you determine the right market for your product and which funding source is most appropriate to maximize the exit for your company.
Venture Fast Track - Company Valuation and Metrics - top down or bottom up?The Capital Network
Defending your corporate valuation to Angels & VCs is nearly impossible. In this program, we will discuss valuation methodologies, metrics, tactics, and tips for early-stage corporate valuations.
The Startup Equity Valuation Timeline
Angel Investment & Valuation
Angel Funding: The Valuation “Triangle”
Three Valuation Methods
VC Valuation Approach: Industry Standard Discount Rates
Comparables Valuation Approach: Median/Mean Round Size
Comparables Valuation Approach: Pre-Money Valuation
Range
Angel Valuation Considerations
The Dave McClure Five “Million Dollar Point” Approach*
You never get a second chance at a first impression. Early-stage ventures seeking investment need to know how to target, locate, approach, and close with venture capitalists, angels, and strategic investors. Hear first-hand a successful pitch from an entrepreneur who has closed a funding round (or two) and how the company’s pitch evolved over time.
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
TCN on Air: Breaking Down Strategic Investments for Life Sciences and technol...The Capital Network
There are many routes to funding your life science startup. One way to get to the next step in the early stages is through strategic investments with industry partners. In this online interactive Google hangout, we will look at how a strategic investment differs from regular financial investments such as angels or VCs, and how this can both negatively and positively impact your company. It will also discuss who potential strategics are, their motivation, as well as the recent trends in strategic investment.
If you are looking for alternative routes to funding, this is the hangout for you!
Expert:
Ryan Sansom – Goodwin Procter
This talk explains the broad framework for deal evaluation. It was anchored by Roopan Aulakh for the pi fellows programme. Most of the talk was an actual case study which is not part of this presentation for confidentiality reasons.
The science and art of Startup ValuationsAnjana Vivek
Insights on Valuation and Negotiations… OR … how Can You can get a better price. ..whether for M&A or VC or strategic investment. Valuation is Subjective and Objective; there is a math to valuation, there are Business models which are captured in financial models and spread sheets. There is scenario analysis and sensitivity analysis. There are premiums and discounts assigned to multiple factors. This objective math is impacted by subjectivity of the person(s) doing the calculation, for example, if you are an unlisted company, is the discount factor 50% or 80% or somewhere in-between? This presentation sets out the methods and process of valuation with a few specific examples on valuations for different cases, including mentoring, acceleration, investment and more.
Envisage. Stratigize. Execute: IDEA to BUSINESSAnjana Vivek
Coming up with a brilliant idea for your venture is just the beginning, taking it forward is where many people flounder. Session at Eximius, the Entrepreneur Summit at IIMB on how to go about implementing your idea.
Know Your Valuation for Equity Compensation (And Avoid the Perils of 409A)The Capital Network
If you are a CEO or a CFO of a high growth startup, it is vital to understand how to value your company correctly.
Here is a quick list of questions this lunch will help you answer:
Do you offer or are you planning to offer your employees stock options? Do you know the difference between ISOs and non-ISOs? Do you understand the general valuation concepts and approaches that the IRS has outlined, especially as they apply to early-stage companies? Did you know that if you run afoul of the 409A rules, your employees could have an unpleasant tax surprise and that some of that responsibility could revert back to you as the employer? Do you know if and when you need to engage an outside expert to assist with a valuation?
This is a limited seat lunch to teach issues of valuation for equity compensation and ask specific questions about your company.
Experts:
– Alicia Amaral, Scalar Analytics
– Scott Goodwin, Wolf & Company
How do you value a pre-revenue startup?
This is an introduction to some of the methods that are typically used to value a startup, detailing what is important to establish before carrying out a valuation and how it relates to the chosen fundraising strategy and your local market.
In this workshop, Jeff Faust, CVA will discuss how to prepare for a valuation as a startup, as well as commonly used valuation methods in various domains, including venture capital.
Jeff will take Q&A throughout the presentation.
How do you figure out how much money you need, and when? We’ll look at a case study and talk P&L to help you determine the right market for your product and which funding source is most appropriate to maximize the exit for your company.
Venture Fast Track - Company Valuation and Metrics - top down or bottom up?The Capital Network
Defending your corporate valuation to Angels & VCs is nearly impossible. In this program, we will discuss valuation methodologies, metrics, tactics, and tips for early-stage corporate valuations.
The Startup Equity Valuation Timeline
Angel Investment & Valuation
Angel Funding: The Valuation “Triangle”
Three Valuation Methods
VC Valuation Approach: Industry Standard Discount Rates
Comparables Valuation Approach: Median/Mean Round Size
Comparables Valuation Approach: Pre-Money Valuation
Range
Angel Valuation Considerations
The Dave McClure Five “Million Dollar Point” Approach*
You never get a second chance at a first impression. Early-stage ventures seeking investment need to know how to target, locate, approach, and close with venture capitalists, angels, and strategic investors. Hear first-hand a successful pitch from an entrepreneur who has closed a funding round (or two) and how the company’s pitch evolved over time.
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
TCN on Air: Breaking Down Strategic Investments for Life Sciences and technol...The Capital Network
There are many routes to funding your life science startup. One way to get to the next step in the early stages is through strategic investments with industry partners. In this online interactive Google hangout, we will look at how a strategic investment differs from regular financial investments such as angels or VCs, and how this can both negatively and positively impact your company. It will also discuss who potential strategics are, their motivation, as well as the recent trends in strategic investment.
If you are looking for alternative routes to funding, this is the hangout for you!
Expert:
Ryan Sansom – Goodwin Procter
This talk explains the broad framework for deal evaluation. It was anchored by Roopan Aulakh for the pi fellows programme. Most of the talk was an actual case study which is not part of this presentation for confidentiality reasons.
The science and art of Startup ValuationsAnjana Vivek
Insights on Valuation and Negotiations… OR … how Can You can get a better price. ..whether for M&A or VC or strategic investment. Valuation is Subjective and Objective; there is a math to valuation, there are Business models which are captured in financial models and spread sheets. There is scenario analysis and sensitivity analysis. There are premiums and discounts assigned to multiple factors. This objective math is impacted by subjectivity of the person(s) doing the calculation, for example, if you are an unlisted company, is the discount factor 50% or 80% or somewhere in-between? This presentation sets out the methods and process of valuation with a few specific examples on valuations for different cases, including mentoring, acceleration, investment and more.
Envisage. Stratigize. Execute: IDEA to BUSINESSAnjana Vivek
Coming up with a brilliant idea for your venture is just the beginning, taking it forward is where many people flounder. Session at Eximius, the Entrepreneur Summit at IIMB on how to go about implementing your idea.
Finance nuances for a scaling venture - SAYesAnjana Vivek
Session on finance for 25 young entrepreneurs @ the South Asian Young Entrepreneurs Summit (SAYes) organised by The US Consulate General Chennai and The Indus Entrepreneurs (TiE) Bangalore Chapter
Icai national seminar m&a-deal valuationAnjana Vivek
Some pointers on Deal Valuation which is beyond numbers, including some questions 'to trigger thinking' related to valuation from a buyer/seller perspective
Microsoft Ventures Masterclass - Business models growth and value creationAnjana Vivek
A framework and process to analyse your business and help you take it to the next level. Topics: Business Models – A Brief Introduction; Stock Take – At the Start; Growth: Sales and Beyond Sales; Valuation and Value Creation; Other Aspects beyond numbers
VC, PE, Angel, HNI, Seed Investor, Incubator, Accelerator, Corporate Investor, Strategic Investors, 3 Fs .. how do you distinguish between them? What is the homework you need to do before you approach an investor? How will you stand out from the clutter and demonstrate you can create value? How will you crack the exam of getting investors into the company, assuming you have a great idea, product, service or solution?Should you think of Plan B? Should you revisit your Business Model?
There is more to managing the financial health of your emerging start-up than raising money and selling out. The day-to-day financials matter, as they impact every other area of your business. Diagnosing your “full” costs, including those to acquire and serve customers, understanding different elements of cost. How your business model impacts your financial model and impacts value creation. It helps to institute the right procedures that will help keep things in check, and give you the visibility into key metrics so you can effectively monitor your progress.How do you read the numbers, the small data, not just the big data? How does value get created and what is valuation? Lack of knowledge may lead you to venture failure. The presentation at the IIMB/NSRCEL session for entrepreneurs and wanna be entrepreneurs is attached here touching on some of these aspects and more... Happy Reading
Knowledge Session on Startup Valuation: How does a Startup approach valuations? Best Practices, Models, Examples of good and bad valuations, etc. ELEVATE 100, an initiative of the Department of Information Technology and Biotechnology, Government of Karnataka aims to provide a comprehensive entrepreneurship platform for startups. The top 100 technology based startups chosen through a rigorous hunt across Karnataka State will tap into a whopping sum of Rs.400 Cr of Government funds. This is the largest pool of funds ever offered by any State Government to Startups.
Start ups challenges for funding optionsAnjana Vivek
How do you choose from this range of investors and more: HNIs, informal and formal Angel groups,Seed Funds,Venture Capital, Private Equity, Banks, Strategic Investors, Corporate Funds; (Family) Business Groups, Indian & Global, Government supported funds, Impact Investors, Incubators, Accelerators, Crowd funding, Online funding platforms
Proprietorship, Private Ltd. LLP or Partnership..?? Anjana Vivek
Multiple options are there starting a venture, for example: Sole Proprietorship, Partnership, Limited Liability Partnership (LLP ), One Person Company (OPC), Private Limited etc. What is the right one for you? Here are some tips to help you decide on what may suit you.
Product Management is a complex and essential practice traversing multiple cross-functional areas within the company. While it is a well known practice in various well established product companies, most Product Management aspects are still adhoc within a startup, largely decided by the founders and the leadership teams, some based on gut, others based on fact-check with very few data points.
Startups are challenged to find the product-market fit early on and there is small room for errors. Hence, a thorough but low-touch Product Management toolkit and framework would be extremely essential for startups.
For IoT companies, it becomes much more complex with both hardware and software, where product management essentials have been very different. Another aspect is the customization you have to do for customers - where do you draw the line? How would you build the product and handle the customization, so that it can be provided easily to other customers with minimal efforts?
In this session, Hans-Bernd Kittlaus and Haragopal Mangipudi, the pioneers of International Software Product Management Association (ISPMA), joined us for an engaging discussion on the above. They alse shared the Low-Touch Product Management Toolkit/Framework that would be applicable to most of the startups in our IoTForum community.
We were joined by 2 of our Founders from IoTForum - Deva and Ganesh, to ask Hara and Hans the hard questions, relevant cases etc.
Product Management is a complex and essential practice traversing multiple cross-functional areas within the company. While it is a well known practice in various well established product companies, most Product Management aspects are still adhoc within a startup, largely decided by the founders and the leadership teams, some based on gut, others based on fact-check with very few data points.
Startups are challenged to find the product-market fit early on and there is small room for errors. Hence, a thorough but low-touch Product Management toolkit and framework would be extremely essential for startups.
For IoT companies, it becomes much more complex with both hardware and software, where product management essentials have been very different. Another aspect is the customization you have to do for customers - where do you draw the line? How would you build the product and handle the customization, so that it can be provided easily to other customers with minimal efforts?
In this session, Hans-Bernd Kittlaus and Haragopal Mangipudi, the pioneers of International Software Product Management Association (ISPMA), joined us for an engaging discussion on the above. They alse shared the Low-Touch Product Management Toolkit/Framework that would be applicable to most of the startups in our IoTForum community.
We were joined by 2 of our Founders from IoTForum - Deva and Ganesh, to ask Hara and Hans the hard questions, relevant cases etc.
Art of Product Management for IoT Startups TiE Bangalore
Product Management is a complex and essential practice traversing multiple cross-functional areas within the company. While it is a well known practice in various well established product companies, most Product Management aspects are still adhoc within a startup, largely decided by the founders and the leadership teams, some based on gut, others based on fact-check with very few data points.
Startups are challenged to find the product-market fit early on and there is small room for errors. Hence, a thorough but low-touch Product Management toolkit and framework would be extremely essential for startups.
For IoT companies, it becomes much more complex with both hardware and software, where product management essentials have been very different. Another aspect is the customization you have to do for customers - where do you draw the line? How would you build the product and handle the customization, so that it can be provided easily to other customers with minimal efforts?
In this session, Hans-Bernd Kittlaus and Haragopal Mangipudi, the pioneers of International Software Product Management Association (ISPMA), joined us for an engaging discussion on the above. They alse shared the Low-Touch Product Management Toolkit/Framework that would be applicable to most of the startups in our IoTForum community.
We were joined by 2 of our Founders from IoTForum - Deva and Ganesh, to ask Hara and Hans the hard questions, relevant cases etc.
In the time of social distancing, telemedicine has emerged as the preferred means of seeking quality healthcare in the country. India’s telemedicine guidelines issued in March 2020 have clarified regulations for startups and investors. With the government’s new guidelines unlocking the prospects for the telemedicine industry, there have been numerous startups that are establishing and announcing their ventures in the segment.
This session provided clarity on the revised guidelines for the telemedicine industry, new prospects to improve access to healthcare at the grass-root level, and global business opportunities.
Opportunities For Entrepreneurs in Bahrain.TiE Bangalore
Opportunities For Entrepreneurs in Bahrain by Dr. Simon Galpin (Managing Director, Bahrain Economic Development Board) and Dharmi Magdani (Country Director - India, Bahrain Economic Development Board).
TiE Sales Masterclass - Guerrilla WarfareTiE Bangalore
Guerrilla Warfare: the art & science of early-stage selling in the B2B world, by our Charter Member Rajiv Raghunandan (Managing Partner, seedX & Arali Ventures)
Salma Karina Hayat is Conscious Digital Transformation Leader at Kudos | Empowering SMEs via CRM & Digital Automation | Award-Winning Entrepreneur & Philanthropist | Education & Homelessness Advocate
When listening about building new Ventures, Marketplaces ideas are something very frequent. On this session we will discuss reasons why you should stay away from it :P , by sharing real stories and misconceptions around them. If you still insist to go for it however, you will at least get an idea of the important and critical strategies to optimize for success like Product, Business Development & Marketing, Operations :)
Reflect Festival Limassol May 2024.
Michael Economou is an Entrepreneur, with Business & Technology foundations and a passion for Innovation. He is working with his team to launch a new venture – Exyde, an AI powered booking platform for Activities & Experiences, aspiring to revolutionize the way we travel and experience the world. Michael has extensive entrepreneurial experience as the co-founder of Ideas2life, AtYourService as well as Foody, an online delivery platform and one of the most prominent ventures in Cyprus’ digital landscape, acquired by Delivery Hero group in 2019. This journey & experience marks a vast expertise in building and scaling marketplaces, enhancing everyday life through technology and making meaningful impact on local communities, which is what Michael and his team are pursuing doing once more with Exyde www.goExyde.com
How to Build a Diversified Investment Portfolio.pdfTrims Creators
Building a diversified investment portfolio is a fundamental strategy to manage risk and optimize returns. For both novice and experienced investors, diversification offers a pathway to a more stable and resilient financial future. Here’s an in-depth guide on how to create and maintain a well-diversified investment portfolio.
What You're Going to Learn
- How These 4 Leaks Force You To Work Longer And Harder in order to grow your income… improve just one of these and the impact could be life changing.
- How to SHUT DOWN the revolving door of Income Stagnation… you know, where new sales come into your magazine while at the same time existing sponsors exit.
- How to transform your magazine business by fixing the 4 “DON’Ts”...
#1 LEADS Don’t Book
#2 PROSPECTS Don’t Show
#3 PROSPECTS Don’t Buy
#4 CLIENTS Don’t Stay
- How to identify which leak to fix first so you get the biggest bang for your income.
- Get actionable strategies you can use right away to improve your bookings, sales and retention.
Best Crypto Marketing Ideas to Lead Your Project to SuccessIntelisync
In this comprehensive slideshow presentation, we delve into the intricacies of crypto marketing, offering invaluable insights and strategies to propel your project to success in the dynamic cryptocurrency landscape. From understanding market trends to building a robust brand identity, engaging with influencers, and analyzing performance metrics, we cover all aspects essential for effective marketing in the crypto space.
Also Intelisync, our cutting-edge service designed to streamline and optimize your marketing efforts, leveraging data-driven insights and innovative strategies to drive growth and visibility for your project.
With a data-driven approach, transparent communication, and a commitment to excellence, InteliSync is your trusted partner for driving meaningful impact in the fast-paced world of Web3. Contact us today to learn more and embark on a journey to crypto marketing mastery!
Ready to elevate your Web3 project to new heights? Contact InteliSync now and unleash the full potential of your crypto venture!
Textile Chemical Brochure - Tradeasia (1).pdfjeffmilton96
Explore Tradeasia’s brochure for eco-friendly textile chemicals. Enhance your textile production with high-quality, sustainable solutions for superior fabric quality.
4. VentureBean Consulting Private Limited 4
To trigger thinking…
• Can your company be the one that grows.. In
business AND Valuation .. in the longer term
• What do you think of when you hear the word
valuation for a business?
• What do you think it is related to?
5. VentureBean Consulting Private Limited 5
To trigger thinking…
Is valuation related to..
• Sales
• Cost
• Profit
• Cash flow
• Combination of above
• Other factors? What else?
6. VentureBean Consulting Private Limited 6
• For Funding
– Angel funding
– Series A..X/Y
– Strategic
• Funding cum
– Incubation
– Acceleration
• Other
– Mentoring fee
– ESOP plan
• Just because..
Why Valuation?
7. VentureBean Consulting Private Limited 7
As a FOUNDER
Put yourself in other party’s shoes…
i.e. what is value to Buyer?
• Valued because of expected return on
investment over some period of time; i.e. valued
because of the future expectation
• Return may be in cash or in kind, tangible or
intangible, or a combination of these
• Identify the drivers of valuation to Buyer
9. VentureBean Consulting Private Limited 9
Valuation methods
These can be broadly classified into:
• Cost based
• Income based
• Market based
For more details on the methods with examples
please check the Appendix; spreadsheet
illustrations will be shared on request
10. VentureBean Consulting Private Limited 10
Some different ways to value
• Cost vs. Market Value
• Historical vs. Replacement
• Differs depending on need of person doing
valuation – investor, entrepreneur, employee,
advisor
• Depending on stage of business, whether for
growth, super growth, exit, distress sale in times
of downturn, closure
12. VentureBean Consulting Private Limited
Valuation
Based on
• Tangibles and Intangibles
• Data and Assumptions
• Subjectivity and Objectivity
12
13. VentureBean Consulting Private Limited
Valuation
• At idea and early stage there is limited data,
more subjectivity; higher weightage given to
– Team
– Potential market
– Competitive scenario
• At next phase, more weightage is given to
– Customer traction
– Pipeline
– Past record of conversion from pipeline etc.
– Immediate past performance
– Business and financial model
13
14. VentureBean Consulting Private Limited
Valuation
• Many methods of computation are there, including
but not limited to
– Multiples of revenue, EBIDTA, user base, etc
– Multiples of industry specific value drivers, e.g. GMV
(Gross Merchandise Value), revenue per user, net margin
per user
– Cash flow based, discounted
– Exit valuation expected
• These are again modified sometimes, for example
revenue multiple may be an average of previous
year, current year expected and forecast for year
ahead; or it could be revenue multiple for one year
ahead. The multiples will vary in both cases
14
15. VentureBean Consulting Private Limited
Valuation
• Financial forecasts
• Are the starting point
• Assumptions may be set out clearly
• Look at different scenarios, optimistic, expected, pessimistic
• Look at sensitivity to key parameters
• Look at funded/bootstrap scenario and partial funding scenario
• In focus in the due diligence review, prior to investment
• Will factor in negotiations, so proceed with care when showing
this to an investor
• Statutory, accounting, tax implications to be
factored in while arriving at valuation and deal
cash flows
15
16. VentureBean Consulting Private Limited
Valuation
Driven by:
• Markets: Flavor of season, competitive
scenario, industry trends
• Team: At helm plus advisors/mentors/board
• Cash burn: Or cash needed, look at scenarios
of minimum bootstrap and best case
• Percentage sharing: Equity promoter is willing
to let go
16
17. VentureBean Consulting Private Limited
Valuation
Driven by:
• Unbundling of deal issues, such as
– Board Membership
– Decision making powers
– Payment/salary to founders
– Assistance in administrative matters (eg. Incubation)
– Contribution to execution and participation in key
activities such as sales, partner tie-ups
– Liquidation preference
– Exit clauses
• Negotiation and taking control of the situation
17
18. VentureBean Consulting Private Limited
Valuation
• Deals can sometimes be structured to
accommodate valuation perceptions
– For eg. linking to future performance
– This could become an area of concern when there is
a possibility of a “down round” when new investors
come into the picture
• For more on valuation: detailed class notes at
http://www.slideshare.net/anjanavivek/valuation-
basics (from set of the Top 4% & 5% viewed on
SlideShare in earlier years)
18
19. VentureBean Consulting Private Limited 19
Process of valuation
• Identify current market models relevant to
venture
• Justify methods selected, assumptions made
A valuation range is preferable
to a single number
20. VentureBean Consulting Private Limited 20
Process of valuation
• Discount for risks, assign premiums
• Look at expected value
• Arrive at valuation range
– especially the point of walking away from the deal
• Identify deal issues (breaker/maker) for
negotiation
• Practice before negotiating
A valuation range is preferable
to a single number
22. VentureBean Consulting Private Limited 22
Valuation : Startup
At very early stage valuation is often a function of:
• Amount of cash burn (with different scenarios of
bootstrap and adequate funding)
• Stake promoter is willing to give up
PLUS factors such as
• Value add expected from potential investor
• Expected funds to be raised in future rounds, and
connecting this to future dilution expected to be made
It would help if you can
articulate And
list this
24. VentureBean Consulting Private Limited 24
Valuation: Startup Examples – Incubation
Incubation by Tech company for idea stage venture:
• Rs.50 lakhs was committed for 1st year, to be drawn on need
basis
• Admin/accounting support to be provided
• Co-working space provided
• Mentors of centre available and assigned to venture for
periodic meetings
• Domain experts from the pool of advisors to be connected to
founders
• Monthly sustenance fee of Rs.20,000 per month agreed to for
each of 2 founders
• 48% equity with Tech Company and balance held equally by
two founders
• Forecast and valuation was connected to this and articulated
25. VentureBean Consulting Private Limited 25
Valuation: Startup Examples – Incubation
Incubation along with Acceleration for idea development:
• 3 member founding team was selected in a Batch for
acceleration
• Mentors assigned from pool
• 4 month program included sessions on idea development and
business planning for group as well as one-on-one special
sessions with each group of promoters
• At end of period, the business idea and plan would be
evaluated by a panel
• If approved, the founders would be incubated for a further
period of 18-24 months, depending on requirement
• Initial seed funds of Rs.25 lakhs allotted, subject to review
• Equity to be taken, varying between 8-15%, depending on
– Stage of readiness of business
– Team experience
– Requirement and other non-financial ask from incubator
– Forecast and valuation calculated and articulated
26. VentureBean Consulting Private Limited 26
Valuation: Startup Examples – Incubation
Incubation for early stage company:
• Facilities and co-working space provided
• Administration assistance provided
• Mentors, CAs, lawyers and other professionals connected to
• Initial seed funds of upto Rs.25 lakhs available
– Fund requirement to be evaluated
– Funding in tranches, based on milestone
– Utilisation to be reviewed
• Equity between 8-12%, depending on
– Stage of company
– Expected growth plan and projections
– Dilution expected in future rounds of fund raising
– Forecast and valuation calculated and articulated
27. VentureBean Consulting Private Limited 27
Valuation: Startup Examples
Names/data changed to maintain confidentiality..
Service business: Value add measures:
• Two year co.
– Rebranded,
– Reclassified domain, pre-funding;
– This was done on advise that revenue multiple would
go up from 3 to 5
• Three year co.
– Changed business model, increased outsourcing of
some service delivery aspects.
– Cost of inputs increased, gross margins reduced
– However operational efficiency increased, net profit
margins increased
– valuation multiples; i.e. revenue and PBT multiples
increased by new potential investors
28. VentureBean Consulting Private Limited 28
Valuation: Startup Examples
Names/data changed to maintain confidentiality..
Investor negotiation:
Early stage idea:
• Jim had high technical knowledge, limited financial
knowledge.
• Investor Z convinced Jim that he could partner and
grow the company to high value in 3 years and
negotiated for half the business.
• Jim got into this without understanding how shares
could get further diluted in later rounds of funding.
• At the end, Jim was left with less than 10% of the
company he started, however valuation was high.
29. VentureBean Consulting Private Limited 29
Valuation: Startup Examples – Mentoring
Names/data changed to maintain confidentiality
Edtech Co. 1 year old:
• One face-to-face (FTF) meeting a month (half day i.e 3-4
hours)
• Advisory for growth strategy and mentoring of leadership team
• 2% equity
• by way of investment brought into the company at a small
premium
• Forecast and valuation connected to this and articulated
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Valuation: Startup Examples – Mentoring
Names/data changed to maintain confidentiality..
Health tech idea stage:
• Two meetings a month (2 hour),
• Assistance in business model development
• Funding strategy, in alternate scenarios of bootstrap and
funded, with assistance in fund raising
• 5% equity
• Equity investment brought in at par at the time of incorporation
of company
• Forecast and valuation connected to this and articulated
31. VentureBean Consulting Private Limited 31
Valuation: Startup Examples – Mentoring
• Range of equity sharing can vary
– from less than 1% to even 10%, depending on the
experience, value add and brand value add by the mentor
– Sometimes can also include a cash component, for eg
success fee as a % of funds raised
% of revenue based on sales lead
• Forecast and valuation should be connected to this
and articulated
• Statutory and tax issues MUST be addressed
while equity is given
32. VentureBean Consulting Private Limited
Valuation: Quality Factors.... To Think Thru
• FOCUS on Quality not just on Quantity …
• Illustrative parameter: Revenue Quality
– Sales Quantity
– Quality of revenue - in terms of
product/service/vertical/location etc.
– Customer segments addressed
– Average revenue per employee
– Number of customers, number of high value customers
– New customers added
– Customers lost
– Pipeline customers
• Customer acquisition strategy
32
33. VentureBean Consulting Private Limited 33
To trigger thinking …
Investment in media/entertainment company: In the days
when valuations were going through the roof…
(numbers changed to maintain confidentiality)
• HewS closed $10 million valuation from InvestorA
• Reading press reports, Investor 2 wanted to participate and asked
the promoters to suggest a valuation
• HewS Team and InvestorA decided at random: 20% increase in 1
week, leading to valuation of $12 million;
• On flight as InvestorA travelled to meet Investor2, he decided he
would not just be a messenger, he would value add, so he decided
to up valuation to $18 m
• During negotiations, Investor2 gave final offer of $15 m
• Thus in about 10 days the company valuation went up by 50%, from
$10 m to $15 m
• Founders ended up with more money than they had planned for and
had to think of ways to spend this!
TODAY the story is reversed.. Valuations are dropping/fluctuating
34. VentureBean Consulting Private Limited 34
To trigger thinking …
Ref: Economic Times: Feb 29, 2016:
Flipkart’s valuation markdown: Billions gone in a flash
ReadMore@:http://economictimes.indiatimes.com/articleshow/51182907.cms?from=mdr
&utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
36. VentureBean Consulting Private Limited
Valuation
• Identify valuation methods and drivers in your
industry
– Number of customers?
– Revenue?
– GMV?
– Number of unique views?
– Average revenue per customer?
– Profitability?
– Cash Flow generated?
– Combination of above?
– Other?
36
38. VentureBean Consulting Private Limited
Valuation
• At the start value is mostly intangible, look at
how this can be made tangible..
• For eg. service – through content, follow up
calls, showcasing feedback, etc.
• Can you think of how you can demo value in
early days of your business
38
39. VentureBean Consulting Private Limited
Valuation
Some examples of value demonstrated:
• Association with credible organisations (incubation, acceleration etc..)
• Team: Reputed/trustworthy; experienced/multi-disciplinary
• Marquee/discerning customers
• Other stakeholders associated – Advisors, investors, bankers, well
known professional service firms etc.
• Feedback/testimonials from reputed persons
• Ability to charge premium pricing
• Ability to address a huge market – i.e. ecommerce companies, value
without profits
For more: 5 Points on Valuation and Negotiations… OR … how You can get
a better price
39
40. VentureBean Consulting Private Limited
In Summary
• Build a Financial Model that is consistent, capture
elements of business model; address deal
rationale
• Look at different valuation models; arrive at a
value range
• Prepare for negotiation
– Identify deal issues
– Think through possible negotiation strategies
– Check that your house is in order for due diligence, else
you may provide hooks for pulling down your valuation
40
41. VentureBean Consulting Private Limited
In Summary
Caution
• Look out for concern issues, hidden agendas; evaluate on
value-based parameters including but not limited to fund
source, governance, ethics and reputation
• Keep an eye on the law and statutory regulations; these
also impact valuation and deal negotiation
• Plan for advisors/CAs/lawyers, due diligence costs and
other deal related costs which will add to the price paid or
reduce the price received for any transaction
• Plan for long term impact of decisions on valuation
41
42. VentureBean Consulting Private Limited
Thank you
42
Reference:
For teaching notes, articles and more on finance, valuation, business models,
leadership and more..
• www.slideshare.net/anjanavivek (Global TOP 4%/5% for 2 years)
• https://www.linkedin.com/today/author/anjanavivek?trk=prof-
sm
• https://www.linkedin.com/pulse/venture-a-question-start-up-
valuation-anjana-vivek?trk=mp-reader-card
• https://twitter.com/VentureBean
• http://www.linkedin.com/company/venturebean-consulting-
private-limited
• https://www.facebook.com/pages/VentureBean-Consulting-
Private-Limited/387846908091034
44. VentureBean Consulting Private Limited 44
Valuation methods
Broadly classified into:
• Cost based
• Income based
• Market based
• Different experts have different classifications
of the various methods of valuation
• Within these methods, there are sub-methods
• Sometimes the methods overlap
45. VentureBean Consulting Private Limited 45
Cost based methods
There are different ways of arriving at cost:
• Book value
• Replacement value
• Liquidation value
NOTE: These methods could become relevant
– In times of valuation downrounds; to get salvageable value
– when one is considering the accounting, legal and tax
impacts of valuation, for eg.
• in deals related to M&As, JVs and partnerships etc..
• in cross-border transactions, depending on countries involved
46. VentureBean Consulting Private Limited 46
Income Based methods
• Earnings capitalisation method or profit
earning capacity value method
• Discounted cash flow method (DCF)
47. VentureBean Consulting Private Limited 47
INCOME: Earnings capitalisation method
• Also known as Profit earnings capacity value
(PECV)
• Value determined by capitalising earnings at a
rate considered suitable
• Assumed that the underlying value driver of the
company is its future earnings potential
• Suitable for fairly established business having
predictable revenue and cost models
• For example
– assume that Company Profittee Limited is earning post
tax profit of Rs. 5 crores and we would like to capitalize
this at 10%.
– The value of the Profittee Limited under this method is
equal to Rs. (5/10%) crores, ie Rs. 50 crores.
48. VentureBean Consulting Private Limited 48
nt
t
t
t
r
CF
Value
1 )1(
• CF = cash flow
• t = the year and
• r = discount rate
i.e. the cash flow for each year from year 1 to year n (which is the time
period under consideration) is discounted to arrive at the present value
of future cash flows from year 1 to n
INCOME: Discounted cash flow
49. VentureBean Consulting Private Limited 49
• Based on expected cash flow & discount rates
• Quality of valuation is dependent on the
assumptions behind the forecast
• Sometimes it is difficult to get a reliable
estimate for the future and the valuation model
may need modification, for example as below:
INCOME: Discounted cash flow
Value: Phase 1
Discounted
Value: Phase 2
Terminal Value
Figure: Net present value
NPV of
Enterprise
Discounted
Discounted
50. VentureBean Consulting Private Limited 50
Market based method
• Also known as relative method
• Assumption is that other firms in industry are
comparable to firm being valued
• Standard parameters used like multiples of
revenue, EBIDTA, PAT, book value,
• Other indicative parameters such as revenue,
revenue per user, net margin per user etc.
• Adjustments made for variances from
standard firms or deals in the recent past,
these can be negative or positive; i.e.
premiums and discounts are assigned
51. VentureBean Consulting Private Limited 51
Exercise in Valuation - I
Plantation Co. Garden Co. Park Co.
Enterprise value/sales 1.4 1.1 1.1
Enterprise value/EBITDA 17.0 15.0 19.0
Enterprise value/free cash flows 20 26 26
Meadows Co.
Sales Rs. 200 crores
EBIDTA Rs. 14 crores
Free cash flow Rs. 10 crores
How would you value Meadows Co. based on
the market/industry information provided?
53. VentureBean Consulting Private Limited 53
Papers Co Docs Co. Prints Co.
Enterprise value/sales 2.6 1.9 0.9
Enterprise value/EBITDA 10.0 21.0 4.0
Enterprise value/free cash flows 21.0 30.0 24.0
Application to PenPencil Co.
Sales Rs. 300 crores
EBIDTA Rs. 15 crores
Free cash flow Rs. 7.5 crores
Exercise in Valuation - II
How would you value PenPencil Co. based on
the market/industry information provided?
54. VentureBean Consulting Private Limited 54
Papers Co Docs Co. Prints Co. Average
Enterprise value/sales 2.6 1.9 0.9 1.8
Enterprise value/EBITDA 10.0 21.0 4.0 11.7
Enterprise value/free cash flows 21.0 30.0 24.0 25.0
Application to PenPencilCo. Average Value
Sales Rs. 300 crores 1.8 Rs. 540 crores
EBIDTA Rs. 15 crores 11.7 Rs. 175.5 crores
Free cash flow Rs. 7.5 crores 25.0 Rs. 187.5 crores
As there is a wide value range, the application of the
relative multiples does not look appropriate in this
case. What are your thoughts on this?
Exercise in Valuation – II: Possible
Solution
55. VentureBean Consulting Private Limited 55
• Simple and easy to use
• Useful when data of comparable firms and assets are
available
• Useful when information about recent deals are
available
Limitations
• Difficulty in getting data, particularly for unlisted
companies
• Easy to misuse
• Selection of comparable can be subjective
• Errors in comparable firms get factored into valuation
model
Market based method