Más contenido relacionado
La actualidad más candente (20)
Similar a Financial Modeling & Business Valuation for Start-ups (20)
Más de Foresight Valuation Group (15)
Financial Modeling & Business Valuation for Start-ups
- 2. “Are Accountants and CFOs
Killing Innovation?”
-- New Knowledge Online Magazine,
INSEAD, March 7, 2013
Foresight Valuation Group © 2014
- 3. About Me: Efrat Kasznik
Founder and President, Foresight Valuation Group (Palo Alto, CA), a Silicon-Valley based
intellectual property, valuation and start-up advisory firm.
Lecturer on IP Strategy, Stanford Graduate School of Business (GSB), MBA elective class;
mentor at the Center for Entrepreneurial Studies at the GSB
Licensing Executives Society (LES), High Tech Sector - Leadership Committee; Chair,
Cloud Committee
Intellectual property (IP) valuation and strategy expert, with 20 years of experience
analyzing IP portfolios for mergers & acquisitions, financial reporting, technology
commercialization decisions, tax compliance, transfer pricing, litigation damages and
business liquidations.
Listed on IAM 300 list of top IP strategists
Co-founder, CFO and adviser to startups in the US and Europe, in the fields of
telecom, mobile, media, cleantech, nanotech and healthcare.
Member of the Astia C-Suite screening committee
Foresight Valuation Group © 2014
3
- 4. Outline
Building a Financial Model using CURVE TM
User
Rollout
Revenue Buildup
Expense Buildup
Startup Valuation & Fundraising
Why
Value your Startup?
Valuation Example
Foresight Valuation Group © 2014
4
- 5. What’s in a Billion Dollars?
Foresight Valuation Group © 2014
- 8. Goals for Startup Financial Modeling
Manage Investor Expectations
Pass Investor Due Diligence
Create a 2-Year Operating Budget
Foresight Valuation Group © 2014
8
- 9. Financial Model Flow:
Telling Your Story with Numbers
User/Customer
Rollout:
Model
Infrastructure
Foresight Valuation Group © 2014
Revenue Buildup:
Opportunity for
investors/valuation
9
Cost Buildup:
Basis for
fundraising
- 11. 1. User Rollout
•
The User Base is the infrastructure on which
the financial model is built:
•
•
•
Choose modeling unit
Roll out users based on user acquisition strategy (go
to market plan, engineering to support number)
Benchmark results against target market to
estimate penetration
Foresight Valuation Group © 2014
11
- 12. Unit of Modeling Example:
User Accounts
The modeling unit is the revenue
generating unit >> Channel to market
Foresight Valuation Group © 2014
12
- 13. User Rollout Example: Mobile Apps
User rollout
trajectory is
modeled by Time
To A Million
downloads, based
on other popular
applications
Foresight Valuation Group © 2014
13
- 14. User Rollout Example:
Five Year Forecast
Company Accounts
Company accounts at end of year
20
Year 2
Year 3
Year 4
Year 5
• 0.6 million
16
Downloads (Millions)
Year 1
18
• 2.1 million
• 5.8 million
14
12
10
8
6
4
2
• 10.4 million
-
0
Months From Launch
Total Company Accounts (MM)
Total Batzu Accounts (MM)
• 16.4 million
Foresight Valuation Group © 2014
5 10 15 20 25 30 35 40 45 50 55 60
14
- 15. User Benchmarking:
Top Down Penetration
300.00
250.00
Internet Users in Latin America (MM)
Millions
15200.00
Hispanic ownership of mobile devices,
US & Mexico (MM)
150.00
Total Batzu Accounts (MM)
Total Company Accounts (MM)
100.00
50.00
Foresight Valuation Group © 2014
15
Oct-17
Jul-17
Apr-17
Jan-17
Oct-16
Jul-16
Apr-16
Jan-16
Oct-15
Jul-15
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
-
- 17. 2. Revenue Buildup
•
Revenues represent the opportunity for investors, and
the basis of valuation for early stage ventures
• Identify user monetization opportunities
• Focus on top 2-3 revenue sources at the most!
• Project revenues at least 3 years out (5 if possible)
• Benchmark results against comparable companies
Foresight Valuation Group © 2014
17
- 18. Sources of Revenue Example:
Mobile Apps
Advertising
Freemium account
Upgrades
Foresight Valuation Group © 2014
18
- 19. Advertising Example: A User Session
Log In
Select Channel
Select Story
Opportunity for
ad impression
Consume Content
Opportunity for
ad impression
We have assumed that the average account holder will
use app about 2 times per week
Foresight Valuation Group © 2014
19
- 20. Advertising Revenue Unit:
cost per mille (CPM)
The cost of an online advertising campaigns is
determined by the total number of impressions (=
pages that users see)
The impressions are sold as advertising space in
units of 1,000 (mille) display ad impressions
The rate quoted for impressions is the cost per mille,
abbreviated as CPM
CPM
= the cost for 1,000 display ad impressions
Foresight Valuation Group © 2014
20
- 21. Premium Subscription Example:
Revenue Assumptions
Upgraded account allows access to additional
premium content and other premium features
$2
monthly subscription price for premium accounts
3% of users become premium subscribers
Cost of premium content is 20% of the upgrade
subscription
Premium accounts will be offered starting in Year 2
Foresight Valuation Group © 2014
21
- 22. Average Annual Revenue per User:
Benchmark Analysis Example
$30.00
$28.56
$25.00
$20.00
$15.00
$9.56
$10.00
$7.04
$5.00
$2.96
*$3.61
$7.50
LinkedIn
Pandora
$4.84
$-
Twitter
Foresight Valuation Group © 2014
Batzu
Company
Facebook
22
AOL
Google
- 24. 3. Expense Buildup
•
Expenses represent the basis for fundraising :
• Direct Cost >> vary with revenues (COGS)
• Fixed Cost >> mostly payroll (org chart)
• Other fixed cost: IT, office expenses, marketing,
licensing, legal, professional fees
• Benchmark Cost against expenses, industry ratios
Foresight Valuation Group © 2014
24
- 25. Cost Modeling Overview
Cost by Function:
•
•
•
•
Cost of Goods Sold
Engineering
Sales and Marketing
General and
Administrative
Foresight Valuation Group © 2014
Years 1 & 2 are
predicted on a
monthly basis based
on actual assumptions
25
Years 3 – 5 are
driven as a
percentage of
revenue using industry
normalized ratios
- 26. Principals of Cost Planning
Minimize the overhead (and inventory), and make
cost as variable as possible, so you only pay when
you make money
Funding the overhead, and your working capital
gaps, so you don’t dilute your shareholders
Foresight Valuation Group © 2014
26
- 27. Payroll – Organizational Chart
CEO
Director of Sales
and Business
Development
CMO
Marketing
Director of
Marketing and PR
Chief Content
Officer
COO
Sales & Business
Development
Administrative
Director of New
Business Ventures
Country Publisher
(Mexico)
Marketing
manager
Business
Development
Manager
PR manager
Business
Development
Manager
Director of
Branded Content
Creation
PR manager
Sales
Representative
Copywriter
Sales
Representative
Copywriter
Copywriter
Country Publisher
(U.S.)
Director of Content
Curation
Copywriter
Director of Page
Design
Controller
Various Consultants
Legal Services
Project Manager
Dev Leader
Content Curator
Backend Dev
Content Curator
Copywriter
Page Designer
Page Designer
Backend Dev
Publishing
Content Curator
HTML5 Dev
HTML5 Dev
Key:
To be Hired
Immediately
Foresight Valuation Group © 2014
Director of
Operations
CTO
To be Hired
in Year 2
To be Hired
in Year 3
Sitting in
Mexico
Office
27
Outsourced
Mobile Dev)
Graphic Designer
Mobile Dev)
Engineering
QA Analyst
QA Analyst
System Admin
- 29. Revenue vs. Cost:
Five Year Forecast
60.0
49.6
50.0
Dollars ($MM)
Breakeven Point
40.0
29.5
30.0
28.2
18.3
20.0
14.3
10.3
10.0
4.9
4.1
6.6
1.0
Year1
Year2
Year3
Gross Revenue
Foresight Valuation Group © 2014
Total Operating Costs
29
Year4
Year5
- 30. Outline
Building a Financial Model
User Rollout
Revenue Buildup
Expense Buildup
Startup Valuation & Fundraising
Why
Value your Startup?
Valuation Example
Foresight Valuation Group © 2014
30
- 32. What’s in a Billion Dollars?
Foresight Valuation Group © 2014
- 33. Key Performance Indicators (KPI):
The New Valuation Fundamentals
KPI = Measurable Success Factors> Driving ProductMarket Iteration Cycle
Customer Acquisition Cost (CAC)
Customer Lifetime Value (LTV)
Average Revenue Per User (ARPU)
Customer Stickiness
Customer Attrition (Churn Rate)
Viral Coefficient
Conversion Rate
Foresight Valuation Group © 2014
33
- 35. Series A Funding Example:
The Valuation “Triangle”
Cost
Model
Funds Raised ($5)
Share Given to
Investors:
5/20 =25%
Company premoney valuation
($15)
Challenge: minimizing investors’ share while not
overstating valuation
Foresight Valuation Group © 2014
35
Revenue
Model
- 36. Valuation Overview:
At Exit Point (Year 5)
$3.61
13.7 Million
Average
Revenue / User
Average accounts in
Year 5
Revenue in
Year 5
$50
Million
5X
Exit Multiple
$250 Million
40%–60%
Discount Rate
Foresight Valuation Group © 2014
36
Value in
Year 5
$24
Million
Value
Today:
Probability?
- 37. Industry Standard Discount Rates
Seed
• 80%+
Angel
Series A
• 40-60%
Series B
• 30-50%
Bridge
Sources:
• 50-70%
• 25-35%
How Venture Capital Works , Harvard Business Review
A Method for Valuing High-Risk Long-Term Investments, Harvard Business School
37
Foresight Valuation Group © 2014
- 38. Value per User Benchmarks
$90.00
$80.00
$80.00
$83.33
$75.00
$70.00
$65.20
$60.00
$50.00
$40.00
$30.00
$30.00
$17.40
$20.00
$10.00
*$18.15
$18.59
Twitter
Batzu
Company
Yelp
$32.83
$7.38
$Instagram
Foresight Valuation Group © 2014
Foursquare Facebook
38
LinkedIn
Pinterest
DropBox
Path
- 39. About Foresight Valuation Group
We Are
Foresight Valuation Group, LLC (FVG) is a Silicon-Valley based intellectual
property (IP) consulting firm, providing high quality analytical services.
We Provide
A full suite of services designed to help our clients increase their bottom-line
results through valuing, strategically managing and monetizing their IP assets.
IP Valuations
IP Strategy
Litigation Support
Business Valuations
Economic Analysis
Startup Advisory
Foresight Valuation Group © 2014
39
- 40. THANK YOU!
Efrat Kasznik
President, Foresight Valuation Group
ekasznik@foresightvaluation.com
www.linkedin.com/in/ekasznik
Office: 650-561-3374
www.foresightvaluation.com
Presentation available upon request