Xavier Corman | Martin van Wunnik 128/05/2013 Xavier Corman | Martin van Wunnik 128/05/2013

Finance for Startups

How to valuate your company,

with Capricorn Venture Partners

Martin van Wunnik

Xavier Corman

Xavier Corman | Martin van Wunnik 228/05/2013 Xavier Corman | Martin van Wunnik 228/05/2013

Sponsors

Xavier Corman | Martin van Wunnik 328/05/2013 Xavier Corman | Martin van Wunnik 328/05/2013

Finance for Startups

Introduction

• Financial Valuation Basics

• Non Financials Aspects

• Capricorn Venture Partners

• Q&A

Xavier Corman | Martin van Wunnik 428/05/2013 Xavier Corman | Martin van Wunnik 428/05/2013

This presentation is available for free:

http://www.slideshare.net/XavierCorman

http://www.slideshare.net/FinanceCoach24

Xavier Corman | Martin van Wunnik 528/05/2013 Xavier Corman | Martin van Wunnik 528/05/2013

Who we are

Martin van Wunnik

Xavier Corman

Xavier Corman | Martin van Wunnik 628/05/2013 Xavier Corman | Martin van Wunnik 628/05/2013

Financial Valuation Basics

Based on Balance Sheet

Based on Profit & Loss Statement

DCF – Discounted Cash Flows

with WACC – Weighted Average Cost of Capital

& IRR – Internal Rate of Return

Xavier Corman | Martin van Wunnik 728/05/2013 Xavier Corman | Martin van Wunnik 728/05/2013

Based on Balance Sheet

Net Assets = Total Assets – Total long term debts

Adjusted Net Assets = : +/- adjustments

Provisions, historical values (land, buildings),

‘normalized salaries’, …

Liquidation value :

Not going-concern (social liabilities, C4, …)

Goodwill, Customers, Patent, etc…

Xavier Corman | Martin van Wunnik 828/05/2013 Xavier Corman | Martin van Wunnik 828/05/2013

Based on Profit & Loss Statement

Multiples based on:

Sales

EBITDA

EBIT

Taxable Profit

Net Profit

www.impulse.de

•

Xavier Corman | Martin van Wunnik 928/05/2013 Xavier Corman | Martin van Wunnik 928/05/2013

DCF – Discounted Cash Flows

Xavier Corman | Martin van Wunnik 1028/05/2013 Xavier Corman | Martin van Wunnik 1028/05/2013

WACC

Weighted Average Cost of Capital

Time & Risk

The WACC is the cost of each capital component,multiplied by its proportional weight,and then summing them up.

Xavier Corman | Martin van Wunnik 1128/05/2013 Xavier Corman | Martin van Wunnik 1128/05/2013

Cost of Equity:

Which elements ?

re = rf + β × (rm − rf)

Capital Asset Pricing Model (CAPM)

rf = risk-free rateβ = equity beta (volatile)(rm − rf) = market risk premium

Xavier Corman | Martin van Wunnik 1228/05/2013 Xavier Corman | Martin van Wunnik 1228/05/2013

IRR – Internal Rate of Return

IRR makes DCF = 0

� Present value of all future cash flow

= initial investment (i.e. break even)

The higher IRR, the better

(when all other factors are equal)

Xavier Corman | Martin van Wunnik 1328/05/2013 Xavier Corman | Martin van Wunnik 1328/05/2013

Investor’s motivation

Return on investment

Social aspect

Influence on the management of the company

Xavier Corman | Martin van Wunnik 1428/05/2013 Xavier Corman | Martin van Wunnik 1428/05/2013

IRR (Internal Rate Return)

Xavier Corman | Martin van Wunnik 1528/05/2013 Xavier Corman | Martin van Wunnik 1528/05/2013

Evolution IRR/maturity

Xavier Corman | Martin van Wunnik 1628/05/2013 Xavier Corman | Martin van Wunnik 1628/05/2013

Pré-money & Post-money

Xavier Corman | Martin van Wunnik 1728/05/2013 Xavier Corman | Martin van Wunnik 1728/05/2013

Evolution IRR/maturity

Xavier Corman | Martin van Wunnik 1828/05/2013 Xavier Corman | Martin van Wunnik 1828/05/2013

Idea MVP 1st clients Break-even TOTAL

Scenario 1 Capital increase 1.000.000 1.000.000

Shares investor 40%

Type of investor BA+VC

Cost of capital 100% 50% 35% 100%

Scenario 2 Capital increase 50.000 200.000 750.000 1.000.000

Shares investor 5% 15% + 4% = 23% 15%+13%+4%=31%

Type of investor FFF BA VC

Cost of capital 100% 50% 35% 41%

Cash need

IRR

Xavier Corman | Martin van Wunnik 1928/05/2013 Xavier Corman | Martin van Wunnik 1928/05/2013

Scenario 1

•Premoney: 2M

•Investment : 1 M

•Postmoney : 3 M

•Shares for 0,5 M: 16,7 %

Scenario 2

•Premoney: 2M

•Investment : 0,5 M

•Postmoney : 2,5 M

•Shares for 0,5 M: 20 %

Xavier Corman | Martin van Wunnik 2028/05/2013 Xavier Corman | Martin van Wunnik 2028/05/2013

Valuation - What is dilution ?

Xavier Corman | Martin van Wunnik 2128/05/2013 Xavier Corman | Martin van Wunnik 2128/05/2013

Relution / Dilution

Xavier Corman | Martin van Wunnik 2228/05/2013 Xavier Corman | Martin van Wunnik 2228/05/2013

Tools for relution

• Options (call/put)

• Warrants

Xavier Corman | Martin van Wunnik 2328/05/2013 Xavier Corman | Martin van Wunnik 2328/05/2013

Capricorn Venture Partners

Free download :

http://www.slideshare.net/XavierCorman

http://www.slideshare.net/FinanceCoach24