The document discusses various methods for valuing companies, especially those that are pre-commercialization. It describes approaches such as discounted cash flow analysis, comparable transaction methods, and venture capital valuation models that assign points based on factors like management team, product development, market opportunity, competition and risks. The document also addresses investor expectations around pre-money valuations, the importance of understanding potential buyers, and how building sales and traction can increase a company's valuation over time.
This slide deck prepared by Gerard Buckley (Chair, MLA) is from our Entrepreneur Workshop: Accessing Capital From an Angel Investor Network - Your First Professional Investment – Who, What, When, Where and How?
The session took place at PwC on October 29, 2013
This slide deck prepared by Gerard Buckley (Chair, MLA) is from our Entrepreneur Workshop: Accessing Capital From an Angel Investor Network - Your First Professional Investment – Who, What, When, Where and How?
The session took place at PwC on October 29, 2013
Valuation is caveat emptor –buyer beware. More investors have lost more money because they overpaid for a stock than has been lost due to fraud. (Warren Buffett and Benjamin Graham = Value Investing)
Raising Capital: Negotiating with Potential Investors (Series: The Start-Up/S...Financial Poise
Every business needs capital (cash) to fund its activities. But not all capital is created equal. At the most macro level, a business can raise cash by selling equity or by borrowing (and these alternatives are not by any means mutually exclusive).
This webinar explains the different types of capital available to fund a startup; how to identify potential funding sources; how to evaluate competing funding proposals; and how (and when) to negotiate financing terms. In addition, this webinar will address the kinds of investors for entrepreneurs to consider for their start-ups.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/raising-capital-negotiating-with-potential-investors-2021/
Financial Projections are key in all aspects of the fundraising process: Pitching, Valuation, Due Diligence, and in the long term planning of your company. Join our experts in an overview discussion of financial projections and learn the key metrics that will get investors to notice you, as well as those that will get you rejected. With the expert advice of serial Startup CFOs and VC Analysts we’ll walk you though the process of what you need to know. If you have no or little idea where to begin with your financial projections, this program is for you.
Angel 101 - The Fundamentals of Angel Investing. Is Angel Investing right for you. This is a presentation given by Gerard Buckley to a group of Angel Investors at Maple Leaf Angels a Toronto based angel group
Alternative Financing refers to financial channels and instruments that have emerged outside of the traditional finance system such as regulated banks and capital markets.Examples of alternative financing activities through 'online marketplaces' are reward-based crowdfunding, equity crowdfunding, peer-to-peer consumer and business lending, invoice trading third party payment platforms. Alternative finance instruments include crypto currencies such as Bitcoin, SME mini-bond, social impact bond, community shares, private placement and other 'shadow banking' mechanisms. Alternative Finance differs to traditional banking or capital market finance through technology-enabled 'disintermediation', which means utilizing third party capital by connecting fundraisers directly with funders, in turn, reducing transnational costs and improve market efficiency.
This presentation takes a look at the key considerations for valuing a startup especially within the context of the Lagos Angel Network. It covers Physical Assets, Intellectual Property, the People, Customers & Contracts, Discounted Cash Flow (DCF), Earnings Multiple, Asset Replacement Cost, Market Size & Growth, Competitors & Barriers and Comparable Recipients.
Know your Angels: What Entrepreneurs need to know about Angel Investors befor...Elaine Werffeli
As both an Entrepreneur and an Angel Investor, I thought it was important to share what Angels are looking for so Entrepreneurs can have an inside view into what Angels are looking
This presentation " Accessing Capital from an Angel Investment Network" is being delivered to Maple Leaf Angels Entrepreneur Workshop by Gerard Buckley, Managing Director, Jaguar Capital
At Jaguar Capital we Advise growth stage companies in the areas of Governance, Financial Management, and Strategy. We help great entrepreneurs scale their business through creating solid governance practices, and implementing financial management and strategic policies in order to innovate and create change in the world.
This presentation on Valuation of Early Stage Companies was Presented at Maple Leaf Angels Lunch and Learn Series. The Shamrock method of Valuation created by the Author was introduced at this presentation.
Valuation is caveat emptor –buyer beware. More investors have lost more money because they overpaid for a stock than has been lost due to fraud. (Warren Buffett and Benjamin Graham = Value Investing)
Raising Capital: Negotiating with Potential Investors (Series: The Start-Up/S...Financial Poise
Every business needs capital (cash) to fund its activities. But not all capital is created equal. At the most macro level, a business can raise cash by selling equity or by borrowing (and these alternatives are not by any means mutually exclusive).
This webinar explains the different types of capital available to fund a startup; how to identify potential funding sources; how to evaluate competing funding proposals; and how (and when) to negotiate financing terms. In addition, this webinar will address the kinds of investors for entrepreneurs to consider for their start-ups.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/raising-capital-negotiating-with-potential-investors-2021/
Financial Projections are key in all aspects of the fundraising process: Pitching, Valuation, Due Diligence, and in the long term planning of your company. Join our experts in an overview discussion of financial projections and learn the key metrics that will get investors to notice you, as well as those that will get you rejected. With the expert advice of serial Startup CFOs and VC Analysts we’ll walk you though the process of what you need to know. If you have no or little idea where to begin with your financial projections, this program is for you.
Angel 101 - The Fundamentals of Angel Investing. Is Angel Investing right for you. This is a presentation given by Gerard Buckley to a group of Angel Investors at Maple Leaf Angels a Toronto based angel group
Alternative Financing refers to financial channels and instruments that have emerged outside of the traditional finance system such as regulated banks and capital markets.Examples of alternative financing activities through 'online marketplaces' are reward-based crowdfunding, equity crowdfunding, peer-to-peer consumer and business lending, invoice trading third party payment platforms. Alternative finance instruments include crypto currencies such as Bitcoin, SME mini-bond, social impact bond, community shares, private placement and other 'shadow banking' mechanisms. Alternative Finance differs to traditional banking or capital market finance through technology-enabled 'disintermediation', which means utilizing third party capital by connecting fundraisers directly with funders, in turn, reducing transnational costs and improve market efficiency.
This presentation takes a look at the key considerations for valuing a startup especially within the context of the Lagos Angel Network. It covers Physical Assets, Intellectual Property, the People, Customers & Contracts, Discounted Cash Flow (DCF), Earnings Multiple, Asset Replacement Cost, Market Size & Growth, Competitors & Barriers and Comparable Recipients.
Know your Angels: What Entrepreneurs need to know about Angel Investors befor...Elaine Werffeli
As both an Entrepreneur and an Angel Investor, I thought it was important to share what Angels are looking for so Entrepreneurs can have an inside view into what Angels are looking
This presentation " Accessing Capital from an Angel Investment Network" is being delivered to Maple Leaf Angels Entrepreneur Workshop by Gerard Buckley, Managing Director, Jaguar Capital
At Jaguar Capital we Advise growth stage companies in the areas of Governance, Financial Management, and Strategy. We help great entrepreneurs scale their business through creating solid governance practices, and implementing financial management and strategic policies in order to innovate and create change in the world.
This presentation on Valuation of Early Stage Companies was Presented at Maple Leaf Angels Lunch and Learn Series. The Shamrock method of Valuation created by the Author was introduced at this presentation.
Is your business valued between $5 and $50 million? Then you should consider a merger or acquisition track to sell your business. Sunbelt Business Brokers can help
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.
Bootstrapping is the art of lifting oneself by the bootstraps. It may sound impossible, but bootstrapping is how many startups survive. Thanks to smart new ways of leveraging limited resources, including the emergence of crowdfunding, bootstrapping is an increasingly viable—and sometimes even the most desirable—funding strategy for early-stage startups. This lecture will cover both the strategic and the practical aspects of bootstrapping for early-stage companies.
Mid-Market Sales Team readiness - Discovery QuestionnaireRandall Isaac
How ready is your software company to launch a Mid Market Sales model? This is a discovery template which will support the creation of a detailed Project Plan
Have you ever wondered why it is so important to use a business broker when buying or selling a business? Take a moment to look through this presentation to find out how a broker can make the work of buying or selling your business easier and more profitable for you!
Evaluate a business - A beginner's guideUplyrn Team
Unlock the secrets of business valuation. Gain expertise in determining business value, negotiating effectively, and making informed business decisions.
Rodger Sprouse • Titan Securities
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Managing A Hedge Fund: Marketing To Investors & Raising CapitalTyra Jeffries
Start Marketing Your Hedge Fund To Investors and Raising Capital with these tips and tricks. Begin to create a sophisticated Investor Relations program today!
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AGENDA
FAIR MARKET VALUE
INTRODUCTION
REVENUE COMPANIES
BUSINESS VALUATIONS
INVESTOR EXPECTATIONS
PRE-COMMERCIALIZATION
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INTRODUCTION
The Valuation of a company is the price to buy the entire company whether it
is public or private. It is usually quoted in the price of a share; however, for a
private company you need to know the total value usually stated as Pre-
Money Valuation before investment and Post- Money Valuation or Market
Capitalization after investment.
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FMV-FAIR MARKET VALUE
``The price , expressed in terms of cash equivalents, at which property would
change hands between a hypothetical willing and able buyer and a
hypothetical willing and able seller, acting at arms length in a open and
unrestricted market, when neither is under compulsion to buy or sell and
when both have reasonable knowledge of the relevant facts.``
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REVENUE COMPANIES
1. Multiple of EBITDA
2. Discounted Cash Flow
3. Comparable transaction method
4. Book Value
5. Total Enterprise Value
6. Market Value
7. Liquidation Value: Forced or Orderly
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BUSINESS VALUATIONS
• Every valuation and Pricing is unique
• In a M&A Transaction price or valuation
comes down to the strategic value the
acquirer brings to the transaction & the
portion paid to the target
• 65% of business owners don’t know what
their company is worth
• 85% have no exit strategy
• 75% of their worth is tied up in their
business
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INVESTOR EXPECTATIONS
• , the most active M&A buyer paid < 20 mil with <20 people for 90 %
of it`s targets
• An Angel Investor has an expectation of 10X
• Survey conducted among USA angel groups by Bill Payne in 2012. Average
Pre-Money valuation is 2.96m & Median is 2.75m an increase over`11
• The usual range of valuation for an pre- commercialized company 1 to 3 mil
• A Convertible Debenture (last weeks lunch and learn) is a way to take the
valuation discussion off the table
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INVESTOR EXPECTATIONS
• At the end of the day valuations are subjective
• Many VC`s will not discuss investment until a price is set
• A high valuation may create an orphaned financing or even worse a future
down round
• Businesses are sold not bought, a business should be preparing for an exit
from the start
• A company needs to understand the potential buyers universe (Financial vs.
Strategic buyers) and what they are looking for.
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INVESTOR EXPECTATIONS
• A USA with concerning terms will have negative pressure on valuation
• Valuation is calculated on a Fully Diluted Basis – all options, warrants,
convertible debentures, vesting, etc. are converted for the purposes of
presenting the `Capitalization Table` referred to as `Cap Table`
• Valuation is caveat emptor – buyer beware. More investors have lost more
money because they overpaid for a stock than has been lost due to fraud.
(Warren Buffett and Benjamin Graham = Value Investing)
• Concentrated sales is negative for valuation
• Bootstrapping and obtaining traction will assist a company build valuation
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SCORECARD METHOD
Management - quality team in place, except sales
Opportunity - appears to be a huge opportunity
Product – disruptive technology, prototype done
Sales – team not in place , channels unclear
Competition – many small players, lack technology
Other Factors – foreign Market, partners
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RISK FACTOR METHOD
• Stage of the business
• Legislation/Political risk
• Manufacturing risk
• Sales and marketing risk
• Funding/capital raising risk
• Competition risk
• Technology risk
• Litigation risk
• International risk
• Reputation risk
• Potential lucrative exit
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SHAMROCK METHOD
• Credit for Actual Invested Capital (no sweat equity)
• Up to 250K for Management Team
• Up to 250K for Proof of Concept or Product Validation
• Up to 250K for Disruptiveness of Technology & Patents
• Up to 250K for Business Model, pricing, etc.
• Up to 250K for other including advisors, governance, financials,
company infrastructure, etc.
• Up to 250k for go to market strategy, traction, growth…
• Credit for 2 years of revenue run rate up to 3 years