This is the 7th in the 8th session course on Entrepreneurship for working executives and this provides an overview of the different methods of valuing a company with emphasis on the DCF method. A couple of examples of how startups in India have increased their valuation have also been included based upon publicly gleaned information
Material used in the Entrepreneurship course (Bachelor in Management) at the Toulouse Business School (Barcelona Campus)
November 2017
Brief review of the different stages in the life of a Start Up company, type of investors, valuation methods, the importance of growth management
The art of the pitch: Pitching angels, corporate venture, VC's for investment Gregory Phipps
Some advice and tips on content and approach to "pitching" potential angel investors, corporate investors, or venture capitalists for equity investment.
Fixed Capital Evaluation To Improve Business Growth Powerpoint Presentation S...SlideTeam
Fixed capital is required to purchase the assets for production purposes and a long duration and not for selling purposes such as for purchasing land and buildings, furniture and fixtures, and machinery and plant. The objective of this deck is to assess the requirements and performance of fixed assets in our company, understand the need for fixed capital investment, and evaluate the need for expansion, development programs and affect equipment replacement. We have covered the current situation analysis wherein current challenges faced by our company, fixed asset turnover ratio for the past 10 years, calculation of depreciation on fixed assets are analyzed The presentation also focuses on the need for fixed capital evaluation in a company such as collateral security, financial reports and audits, and capital budgeting. Factors affecting the requirement of fixed capital in our company are also focused such as the nature of the business, the scale of operation, production technique, technology up gradation, growth prospects, diversification, etc. This slide focuses on the sources of fixed capital such as owners resources, issue of shares, issue of right shares, private placement of shares, issue of debentures, term loans, retained earnings, lease financing, etc. Techniques considered to evaluate fixed capital are discussed here such as net present value, internal rate of return, payback period, and best investment measure techniques are used. The deck also covers the implementation plan, impact of fixed capital evaluation, fixed asset management software, and fixed asset dashboards. https://bit.ly/3tp6sTn
Material used in the Entrepreneurship course (Bachelor in Management) at the Toulouse Business School (Barcelona Campus)
November 2017
Brief review of the different stages in the life of a Start Up company, type of investors, valuation methods, the importance of growth management
The art of the pitch: Pitching angels, corporate venture, VC's for investment Gregory Phipps
Some advice and tips on content and approach to "pitching" potential angel investors, corporate investors, or venture capitalists for equity investment.
Fixed Capital Evaluation To Improve Business Growth Powerpoint Presentation S...SlideTeam
Fixed capital is required to purchase the assets for production purposes and a long duration and not for selling purposes such as for purchasing land and buildings, furniture and fixtures, and machinery and plant. The objective of this deck is to assess the requirements and performance of fixed assets in our company, understand the need for fixed capital investment, and evaluate the need for expansion, development programs and affect equipment replacement. We have covered the current situation analysis wherein current challenges faced by our company, fixed asset turnover ratio for the past 10 years, calculation of depreciation on fixed assets are analyzed The presentation also focuses on the need for fixed capital evaluation in a company such as collateral security, financial reports and audits, and capital budgeting. Factors affecting the requirement of fixed capital in our company are also focused such as the nature of the business, the scale of operation, production technique, technology up gradation, growth prospects, diversification, etc. This slide focuses on the sources of fixed capital such as owners resources, issue of shares, issue of right shares, private placement of shares, issue of debentures, term loans, retained earnings, lease financing, etc. Techniques considered to evaluate fixed capital are discussed here such as net present value, internal rate of return, payback period, and best investment measure techniques are used. The deck also covers the implementation plan, impact of fixed capital evaluation, fixed asset management software, and fixed asset dashboards. https://bit.ly/3tp6sTn
SBI Magnum Balanced Fund: An Open-ended Balanced Scheme - Sep 16SBI Mutual Fund
SBI Magnum Balanced Fund invests in a mix of equity and debt investments. It provides a good investment opportunity to investors who do not wish to be completely exposed to equity markets, but are looking for relatively higher returns than those provided by debt funds. The scheme invests in a diversified portfolio of equities of high growth companies and balances the risk through investing the rest in a relatively safe portfolio of debt.To know more about this mutual fund check SBI Mutual Fund page
https://www.sbimf.com/Products/HybridSchemes/Magnum_Balanced_Fund.aspx
Kossan's Financial Evaluation based on their annual financial statement from 2013 to 2015. We evaluate based on theory or formula from subject FIN745 (Financial Management). We also compare the result with Top Glove performance as Industry average.
SBI Dynamic Asset Allocation Fund: An Open-ended Dynamic Asset Allocation Sch...SBI Mutual Fund
SBI Dynamic Asset Allocation Fund is an open-ended dynamic asset allocation scheme which aims to provide investors an opportunity to invest in a portfolio of a mix of equity and equity-related securities and fixed-income instruments which will be managed dynamically so as to provide investors with long-term capital appreciation.To know more about this mutual fund check SBI Mutual Fund page
https://www.sbimf.com/Products/HybridSchemes.aspx
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.
Important Calculations In Personal FinanceManish Chauhan
this presentation will teach some basic formula's every person should know for his personal finance needs . So that he can calculate some basic things himself .
Return on Capital Employed (ROCE) and Return on Equity (ROE)Rajat Kumar
Return on Capital Employed (ROCE) and Return on Equity (ROE) or Return on Net Worth (RONW) are both used to measure the profitability of a company based on the funds with which the company conducts its business. Know about.
Capital Employed is represented as total assets minus current liabilities. In other words, it is the value of the assets that contribute to a company’s ability to generate revenue
Tony Redpath, course coordinator, explains what Entrepreneurship 101 is all about.
Read more about this event on the MaRS site: http://www.marsdd.com/Events/Event-Calendar/Ent101/2008/opening-event-10012008.html
SBI Magnum Balanced Fund: An Open-ended Balanced Scheme - Sep 16SBI Mutual Fund
SBI Magnum Balanced Fund invests in a mix of equity and debt investments. It provides a good investment opportunity to investors who do not wish to be completely exposed to equity markets, but are looking for relatively higher returns than those provided by debt funds. The scheme invests in a diversified portfolio of equities of high growth companies and balances the risk through investing the rest in a relatively safe portfolio of debt.To know more about this mutual fund check SBI Mutual Fund page
https://www.sbimf.com/Products/HybridSchemes/Magnum_Balanced_Fund.aspx
Kossan's Financial Evaluation based on their annual financial statement from 2013 to 2015. We evaluate based on theory or formula from subject FIN745 (Financial Management). We also compare the result with Top Glove performance as Industry average.
SBI Dynamic Asset Allocation Fund: An Open-ended Dynamic Asset Allocation Sch...SBI Mutual Fund
SBI Dynamic Asset Allocation Fund is an open-ended dynamic asset allocation scheme which aims to provide investors an opportunity to invest in a portfolio of a mix of equity and equity-related securities and fixed-income instruments which will be managed dynamically so as to provide investors with long-term capital appreciation.To know more about this mutual fund check SBI Mutual Fund page
https://www.sbimf.com/Products/HybridSchemes.aspx
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.
Important Calculations In Personal FinanceManish Chauhan
this presentation will teach some basic formula's every person should know for his personal finance needs . So that he can calculate some basic things himself .
Return on Capital Employed (ROCE) and Return on Equity (ROE)Rajat Kumar
Return on Capital Employed (ROCE) and Return on Equity (ROE) or Return on Net Worth (RONW) are both used to measure the profitability of a company based on the funds with which the company conducts its business. Know about.
Capital Employed is represented as total assets minus current liabilities. In other words, it is the value of the assets that contribute to a company’s ability to generate revenue
Tony Redpath, course coordinator, explains what Entrepreneurship 101 is all about.
Read more about this event on the MaRS site: http://www.marsdd.com/Events/Event-Calendar/Ent101/2008/opening-event-10012008.html
Session 6 type of enterprise to set upAnilesh Seth
These slides cover session 6 in the 8 session program for working executives on Entrepreneurship.
In this session, the objective is to introduce the various forms of enterprise that entrepreneurs would typically consider setting up. A broad treatise on different forms of enterprise is also provided, more to provide a well-rounded introduction to the subject. A short caselet helps the students analyze the pros and cons of setting up different forms of enterprise and arrive at an informed decision
This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here:
http://flevy.com/browse/business-document/capital-investment-analysis-230
Capital Investment Analysis
Also called Capital Budgeting - a complex topic simplified in an easy to understand presentation which is completely self-explanatory. Explains the framework for financial analysis with examples and provides practical insights. Can be used for reference, training & self paced learning. The presentation includes examples worked in an Excel sheet.
Covers:
* The nature & characteristics of long term investments made by corporations
* The problem associated with measuring the rate of return with long term investments
* The approach to solving this problem
* The key methods used in calculating the rate of return and evaluating alternatives
* The practical aspects of the various inputs required to calculate the return on investment
* The basics of the risks associated with long term investments & how to factor ?in such risks
* The strategic considerations involved in long term investment decisions
* The processes involved in long term investment decisions & its implementation
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.
9.14 TCN Calculate Financial Projections for Investment PresentationsThe Capital Network
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.
Cash flow is the lifeblood of a startup. Effective cash flow management is fundamental to a business’s success.
As a founder, understanding your cash position is super important and you must have a firm grasp of cash flow mechanics to keep your business operating smoothly. To help you stay on top of it, in this webinar, we’ll break down the basics of cash flow management and provide tips so you can guarantee a healthy cash flow for your business.
With a clear understanding of your company’s cash flow, you can get through downturns and be in a strong position to grow in a new post-COVID environment.
This introductory revision presentation guides students through the concept of basic investment appraisal. It examines the nature of capital investment spending and then outlines three common approaches to investment appraisal: payback period, net present value and accounting rate of return. Some key evaluative points relating to investment appraisal are also discussed.
Calculate Financial Projections for Investment PresentationsThe Capital Network
Join our experts in an overview discussion of financial projections. Learn the key metrics that will get investors to notice you, as well as those that will get you rejected. If you have no idea where to begin with your financial projections, this program is for you.
Experts -
Heather Onstott, Launch Capital
Heather Shanahan, Venture Advisors
Ideation and the business canvas session 3Anilesh Seth
This is the third session in my course titled Entrepreneurship Management. In the first two sessions, I introduced the students to the idea of entrepreneurship as being that of identifying opportunities and creating value - not just in start ups. I talked of Entrepreneurial Leadership and presented some facets of the support ecosystem that exists in India. Here in session three I take the discussion one step forward by talking about ideation per se and converting it into an actionable plan using a tool called the Business Canvas.
This is part 2 in a 2 part foundational portion for the course Strategic HRM. The course is aimed at working professionals pursuing an Executive MBA. This part is intended to provide a grounding in Strategy to enable a smooth segue to the second part of the Strategic HRM program. It does not therefore dive into the HR aspect specifically but focuses on establishing the foundation of Strategy and its linkage to HR
This is the first part in a two part presentation aimed at an Executive MBA class for a leading institution in Bangalore. The content focuses on introducing concepts around strategy as a foundation to Strategic HRM. Aside from introducing the relationship, it does not delve in Strategic HRM per se since that is handled in subsequent sessions.
Effective change management walks you through how change was effected in two instances with specific objectives. This is based upon actual experiences and the reader can therefore glean very practical strategies and approaches that make sense to him or her.
Does a captive make sense for my organizationAnilesh Seth
There is a lot of "press" out there that talks about the pros and cons of captives in India. There is one view point that captives are unnecessary, and yet another that captives are a much better bet than outsourcing to a third party. As always, value lies in the eyes of the beholder and this ppt provides an evaluation framework for someone wanting to make a decision
Retention and recruitment during economic downturnsAnilesh Seth
This isnt an academic treatise of the subject but is focused on experiential approaches to tackling the needs of retention and recruitment during periods of uncertainty. I have used 'caselets' to drive home some of the points, and have avoided generating exhaustive to do lists.
Explore our most comprehensive guide on lookback analysis at SafePaaS, covering access governance and how it can transform modern ERP audits. Browse now!
What is the TDS Return Filing Due Date for FY 2024-25.pdfseoforlegalpillers
It is crucial for the taxpayers to understand about the TDS Return Filing Due Date, so that they can fulfill your TDS obligations efficiently. Taxpayers can avoid penalties by sticking to the deadlines and by accurate filing of TDS. Timely filing of TDS will make sure about the availability of tax credits. You can also seek the professional guidance of experts like Legal Pillers for timely filing of the TDS Return.
What are the main advantages of using HR recruiter services.pdfHumanResourceDimensi1
HR recruiter services offer top talents to companies according to their specific needs. They handle all recruitment tasks from job posting to onboarding and help companies concentrate on their business growth. With their expertise and years of experience, they streamline the hiring process and save time and resources for the company.
"𝑩𝑬𝑮𝑼𝑵 𝑾𝑰𝑻𝑯 𝑻𝑱 𝑰𝑺 𝑯𝑨𝑳𝑭 𝑫𝑶𝑵𝑬"
𝐓𝐉 𝐂𝐨𝐦𝐬 (𝐓𝐉 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬) is a professional event agency that includes experts in the event-organizing market in Vietnam, Korea, and ASEAN countries. We provide unlimited types of events from Music concerts, Fan meetings, and Culture festivals to Corporate events, Internal company events, Golf tournaments, MICE events, and Exhibitions.
𝐓𝐉 𝐂𝐨𝐦𝐬 provides unlimited package services including such as Event organizing, Event planning, Event production, Manpower, PR marketing, Design 2D/3D, VIP protocols, Interpreter agency, etc.
Sports events - Golf competitions/billiards competitions/company sports events: dynamic and challenging
⭐ 𝐅𝐞𝐚𝐭𝐮𝐫𝐞𝐝 𝐩𝐫𝐨𝐣𝐞𝐜𝐭𝐬:
➢ 2024 BAEKHYUN [Lonsdaleite] IN HO CHI MINH
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➢FreenBecky 1st Fan Meeting in Vietnam
➢CHILDREN ART EXHIBITION 2024: BEYOND BARRIERS
➢ WOW K-Music Festival 2023
➢ Winner [CROSS] Tour in HCM
➢ Super Show 9 in HCM with Super Junior
➢ HCMC - Gyeongsangbuk-do Culture and Tourism Festival
➢ Korean Vietnam Partnership - Fair with LG
➢ Korean President visits Samsung Electronics R&D Center
➢ Vietnam Food Expo with Lotte Wellfood
"𝐄𝐯𝐞𝐫𝐲 𝐞𝐯𝐞𝐧𝐭 𝐢𝐬 𝐚 𝐬𝐭𝐨𝐫𝐲, 𝐚 𝐬𝐩𝐞𝐜𝐢𝐚𝐥 𝐣𝐨𝐮𝐫𝐧𝐞𝐲. 𝐖𝐞 𝐚𝐥𝐰𝐚𝐲𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞 𝐭𝐡𝐚𝐭 𝐬𝐡𝐨𝐫𝐭𝐥𝐲 𝐲𝐨𝐮 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐚 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐨𝐮𝐫 𝐬𝐭𝐨𝐫𝐢𝐞𝐬."
Business Valuation Principles for EntrepreneursBen Wann
This insightful presentation is designed to equip entrepreneurs with the essential knowledge and tools needed to accurately value their businesses. Understanding business valuation is crucial for making informed decisions, whether you're seeking investment, planning to sell, or simply want to gauge your company's worth.
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
Taurus Zodiac Sign_ Personality Traits and Sign Dates.pptxmy Pandit
Explore the world of the Taurus zodiac sign. Learn about their stability, determination, and appreciation for beauty. Discover how Taureans' grounded nature and hardworking mindset define their unique personality.
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Attending a job Interview for B1 and B2 Englsih learnersErika906060
It is a sample of an interview for a business english class for pre-intermediate and intermediate english students with emphasis on the speking ability.
Unveiling the Secrets How Does Generative AI Work.pdfSam H
At its core, generative artificial intelligence relies on the concept of generative models, which serve as engines that churn out entirely new data resembling their training data. It is like a sculptor who has studied so many forms found in nature and then uses this knowledge to create sculptures from his imagination that have never been seen before anywhere else. If taken to cyberspace, gans work almost the same way.
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
Memorandum Of Association Constitution of Company.ppt
Session 7 valuation
1. Anilesh Seth
Ideator, Co Founder & CEO, KROW
www.krow.in
Strategic Advisor to the Qatalys Group of Companies
Mentor at the KYRON incubator
Visiting Faculty at CMR IT Exec MBA program
Ex-CEO/MD: LGSI, Qatalys & Supervalu India
www.slideshare.net/anilesh
http://In.linkedin.com/in/anileshseth
anileshseth@hotmail.com
2. Some fundamentals first: The time
value of money
• A certain amount of money available today is
worth more than the same amount available
in the future
• This is because the money available today can
earn interest – hence money is worth more,
the sooner it is received
• If you had to make a choice to collect a Rs
100,000 lottery that you won, today, or two
years from now, which would you choose?
3. Some fundamentals first: Present and
Future Value of money
• Let’s say you are going to invest 10,000 today @10%
interest per year
• The future value of this investment is
FV1= 10,000*(1+10%) = 11,000
• At the end of the second year this will be worth FV2 =
11,000*(1+10%) = 12,100
• Or FV2 = 10,000*(1+10%)*(1+10%)
• Or FV2= 10,000*(1+10%)^2
• The general equation is : FVn = PVn*(1+i)^n
• Conversely, to find the Present Value we would use the
equation: PVn = FVn/((1+i)^n)
4. Some fundamentals first: Discounted
Cash Flow (DCF)
• DCF is at the core of arriving at company valuation, based
upon expected future cash flows
• We would need to obtain the present value of each of the
future cash flows
• To do so we need to “discount” each such cash flow to the
present
• The discount rate to be applied would ideally be the WACC
or the weighted average cost of capital – which is nothing
but a blend of the cost of equity and debt
• For a start up this is more an “art” than a science!
• An investor who is seeking a 10 times return in 5 years may
want you to pass the 59% discount rate test!
5. Example of a DCF calculation
All monetary figures in rupees
DISCOUNT RATE 30.00%
Year 1 Year 2 Year 3 Year 4 Year 5
NET CASH FLOW 10,00,000 50,00,000 1,50,00,000 5,00,00,000 10,00,000
Year 1 discounted 7,69,231
Year 2 discounted 29,58,580
Year 3 discounted 68,27,492
Year 4 discounted 1,75,06,390
Year 5 discounted 2,69,329
TOTAL=PV 2,83,31,022
Or use the formula =NPV(rate, VAL1, 2) 2,83,31,022
Remember that the general formula for PV of a future cash flow is
PVn=FVn/(1+i)^n
Remember to discount each cash flow to the present and then add them all up
6. Raising money
• Beauty, like Value is in the eyes of the beholder!
• Yet we still need to arrive at some value for our
start up if we want to raise money
• There are many methods of arriving at value – at
the end of the day these are ranges that you use
to negotiate
• Some methods that are employed are: DCF, Asset
Based, Proxy Based (based upon industry
averages), Cost-plus based
7. Example of a start up: projected cash flows of a B2C
start up: How much to raise and how much to dilute?
ALL MONETARY FIGURES IN RUPEES
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
TOTAL REVENUE - - - 9,55,000 2,61,03,198 15,62,84,806 43,32,45,539 1,20,03,90,883
EXPENSES SUMMARY
PHONE/MOBILE DATACARDS 1,59,930 17,85,500 22,88,500 28,89,400 34,27,900
Rentals/Maintenance/DG/Housekeeping/Security/Utilities/Supplies/Refreshments4,59,000 24,33,600 25,41,600 94,26,000 96,04,200
Hiring/Training/Payroll 2,55,357 30,53,152 23,84,969 36,35,409 34,94,305
Travel Costs 1,94,000 34,92,000 97,92,000 2,35,08,000 3,53,52,000
Legal costs 8,00,000 40,95,525 1,27,350 3,15,075 1,12,700
TOTAL IT COSTS 2,88,600 26,50,650 38,21,950 55,97,550 77,04,600
MARKETING COSTS 18,03,125 4,59,18,000 8,58,27,450 8,81,99,287 11,92,51,665
MANPOWER COSTS 59,75,000 2,95,99,599 3,60,49,567 4,23,01,733 4,83,30,466
OTHERS 1,00,000 10,00,000 15,00,000 20,00,000 30,00,000
DEPRECIATION 1,26,667 11,20,333 31,77,000 42,15,333 53,77,000
- - - - - -
TOTAL EXPENSES 1,01,61,679 9,51,48,360 14,75,10,386 18,20,87,787 23,56,54,837
CASH FLOWS
NET PROFIT/LOSS -92,06,679 -6,90,45,162 87,74,420 25,11,57,753 96,47,36,047
ADD DEPRECITION 1,26,667 11,20,333 31,77,000 42,15,333 53,77,000
LESS CAPEX 6,00,000 31,05,000 94,70,000 38,15,000 65,40,000
LESS DEPOSITS 2,16,000 9,09,000 - 34,11,000 -
TOTAL CASH NEEDED -98,96,012 -7,19,38,829 24,81,420 24,81,47,086 96,35,73,047
8. Analysis
• How much money is required for Year 1?
Should we raise more than that amount? If
yes, how much more?
• Considerations:
– Present valuation and therefore dilution
– Lead time required to raise money in the future:
don’t forget your “burn rate” will be increasing
9. Some more terms
• What is pre-money valuation?
Simply put, this is the value of your firm before you have
raised money. Lets say based upon future cash flows your
firm valuation is Rs 10 crore. This is pre-money valuation
– or the value BEFORE you have infused money from your
investors
• What is post-money valuation?
This is nothing but the pre-money valuation plus the
funding amount that you are seeking. So in the above
example if you are raising Rs 1 crore then your
post=money valuation is Rs 10 crore plus Rs 1 crore = Rs
11 crores
10. Some more terms
• What is dilution?
This is the amount of control you would be giving away in
terms of stock, when you raise money. Remember that Pre-
Money dilution and Post-Money dilution is not the same
• In the previous example, the pre-money value is Rs 10
crore. If you are raising 1 crore, and you agree to a pre-
money dilution, then the value of your enteprise AFTER
funding is deemed to be Rs 10 crore out of which you are
giving away 1 crore worth or 10%.
• However if you agree to give away stock on a post-money
valuation basis then the value of your company is Rs 11
crores and you are giving away 1/11 = 9.09%
11. Some more terms
• Do we assume that after 5 years the company ceases to operate?
We can’t do that…
• But we can assume that it will settle down to a lower growth rate
that reflects its maturity over time
• Hence in the fifth year we should compute a “terminal value” of the
company that is reflective of its future cash flows – albeit at the
lower growth rate. This terminal value too needs to be discounted
to the present and added to the present value to arrive at the true
enterprise value
• The general formula for this is:
Final projected year cash flow * (1 + long term cash flow growth
rate)/(Discount rate – long term cash flow growth rate)
12. OK…back to our example
• Without worrying about the added complexity (tho strictly speaking
required) of the terminal value, the Present Value of the cash flows
projected over 5 years is:
– At a discount rate of 20%: About Rs 45 Crores
– At a discount rate of 30%: About Rs 29 Crores
– At a discount rate of 40%: About Rs 20 Crores
– At a discount rate of 59%: About Rs 10 Crores
• Remember, if we had used the terminal value also, these figures
would be higher
• Assuming a valuation of 20 Crores has been agreed with the
prospective investor, this is the Pre-money valueation of the
company
• If you are raising Rs 1.5 Crores at this stage, your Post-money
valuation would be 21.5 Crores and you would be diluting 1.5/21.5
or roughly 7% of your company
13. Illustration of how value accrues
• Here is a simplified example of how value accrues as the
founders dilute more over time to raise cash. This is purely
illustrative and simplified to show dilution on the part of
the founders only, in each subsequent round…
Stage Timeline Value Funding Post Money Dilution (%) Founders Stake Founders Value
Idea/Formation 1 Yr Ago 10,00,000 0% 100.000% 10,00,000
POC/Angel Now 5,00,00,000 50,00,000 5,50,00,000 9.091% 90.909% 5,00,00,000
Series A 1 Yr Later 22,00,00,000 8,00,00,000 30,00,00,000 26.667% 64.242% 19,27,27,273
Series B 2 Yrs Later 1,50,00,00,000 30,00,00,000 1,80,00,00,000 16.667% 47.576% 85,63,63,636
Founders holding % decreases
Founders holding value increases
TIME
In rupees
14. OK – now onto a quick treatise on
other methods of valuation
• Asset based: Net tangible book value:
– All tangible assets (like cash, WDV of assets, accounts receivable, etc) minus all
liabilities and debt
• Revenue multiple: X * Revenue
• Earnings multiple: X * EBITDA
– Use the average industry profitability as a proxy/indicator
• Cost plus: Sometimes a start up will arrive at a valuation based upon the
market value of the effort they have put in plus a premium on the
idea/product that they have created
The problem with valuing a start up is that you have no history to show. Hence
investors will talk about the management team, the “traction” gained, entry barriers
patentable idea that you may have , recent valuations in similar cases etc….
All the valuation techniques enable you to write down indicative ranges based upon
different approaches/industry proxies and provide both you and the investor a starting point
To negotiate….
Remember that an idea is as good as its execution – and hence the importance of the
management team…
16. Company redBus
Launched August 2006
Capital Rs. 5,00,000
Feb 2007
First round
$1 million Seed Fund and undisclosed investors.
•$500,000 - Seed Fund.
•$500,000 - other investors
July 2009
Second round
$2.5 million - Inventus Capital Partners, Seed Fund and other
unnamed investors
May 2011
Third round
$6.5 million - Helion Venture Partners, Inventus Capital and
Seedfund
March 2013 •Net revenues -Rs 55 crore
•Expected to post a net profit of around Rs 2 crore for FY13.
June 21, 2013 Ibibo Group acquires redBus at an estimated $100 million (about Rs
600 crore).
17. Company Flipkart
Founded 2007
Capital Rs. 4,00,000: Sachin Bansal and Binny Bansal
2009
1st round
$1 million: Accel India
•Assume 15% stake sale at $6.6m valuation. Promoter +
Employees = 85% | Investors = 15%
2010
2nd round
$10 million : Tiger Global.
•Assume 30% stake sale at $33m valuation. Promoters
+ Employees = 59.5% | Investors = 40.5%
June 2011
3rd round
$20 million: Tiger Global.
•Assume 25% stake sale at $80m valuation. Promoters
+ Employees = 44.625% | Investors = 55.475%
18. Company Flipkart
August 2012
4th round
$150 million : MIH (part of Naspers Group) and ICONIQ
Capital.
•Assume stake sale of 15% at $1b valuation. Promoters +
Employees = 37.93% | Investors = 62.07%
10 July 2013
5th round
$200 million: Existing investors including Tiger Global,
Naspers, Accel Partners and Iconiq Capital.
•Assume stake sale of 17% at $1.2b valuation. Promoters
+ Employees = 31.48% | Investors = 68.52%
Oct 10, 2013 $100million:
• Additional 160 million funding announced