TRANSACTION, LICENCE AND ADVERTISING FEES: what to look out for when calculating these revenue streams

The commonality between transaction, licence and safekeeping revenue is not obvious, as they represent very different types of business models, but from a financial planning perspective, they include similar types of calculations. The main commonality is that they are dependent on gross billings that are not recognised as revenue, or in the case of safekeeping Read more about TRANSACTION, LICENCE AND ADVERTISING FEES: what to look out for when calculating these revenue streams[…]

HOW TO CORRECTLY CALCULATE SUBSCRIPTION REVENUE AND OTHER MONTHLY CHARGES

Calculating revenue streams consisting of monthly or other periodic charges is in theory very straightforward: customers pay a regular fixed fee. However, calculating these charges correctly is a challenge, as projections involve using usage or retention assumptions that are difficult to incorporate correctly. SUBSCRIPTION FEES Let’s start from one of the most common revenue types Read more about HOW TO CORRECTLY CALCULATE SUBSCRIPTION REVENUE AND OTHER MONTHLY CHARGES[…]

HOW TO VALUE A STARTUP WITHOUT A FINANCIAL PLAN

  It is possible to value an early-stage company. In fact, most seed stage startups are valued this way, without carrying out complex valuations or projections. However, this makes the valuation highly uncertain, since the financial projections are also part of a company’s business model validation. Another important weakness is that without a financial plan, Read more about HOW TO VALUE A STARTUP WITHOUT A FINANCIAL PLAN[…]

LAYING OUT YOUR STRATEGIC ROADMAP

  Strategy is a general word that can be assigned to a variety of different business aspects. It is basically a plan of action that determines how your business is going to develop. What makes creating an effective strategy more challenging is the multitude of possibilities and the different parts of the businesses that may Read more about LAYING OUT YOUR STRATEGIC ROADMAP[…]

HOW TO CALCULATE REVENUE PROJECTIONS AND DIRECT COSTS

PHYSICAL PRODUCTS Working on your customer base potential is the first step to building reliable financial projections for startups. To start, we can analyse one of the most common types of revenue stream for businesses: the sale of physical products. How to calculate products sold correctly, prices, volumes, customer preferences, inventory and other direct costs. Read more about HOW TO CALCULATE REVENUE PROJECTIONS AND DIRECT COSTS[…]

venture capital investments

How much should Venture Capital contribute to a company’s success?

Venture capital is very important for entrepreneurship and to enable the development in uncertain technologies and business models that take a long time to become profitable. Other funding sources could not take up the risk that VC Funds take, and therefore our businesses and technologies would look very different today if we didn’t have venture Read more about How much should Venture Capital contribute to a company’s success?[…]

THE BASICS OF STARTUP VALUATION

When we value a company, we value its equity (the Market Value of Equity) to determine the price paid for a transaction (acquisition, financing or other) where the investor receives ownership, which is an equity stake. The valuation can take place also for information purposes for debt financing, but it is mostly relevant for equity Read more about THE BASICS OF STARTUP VALUATION[…]

“Innovation and Entrepreneurship”: useful 1985 strategy insights for today’s startup world

Reading Peter F. Drucker’s 1985 book, ‘Innovation and Entrepreneurship’, it became clear that, despite a few trends that are no longer relevant today, many concepts are still very much relevant for startup entrepreneurship today. Peter Drucker has been described as “the founder of modern management”. According to Drucker, entrepreneurs should take advantage of a “window” Read more about “Innovation and Entrepreneurship”: useful 1985 strategy insights for today’s startup world[…]

DIFFERENCES BETWEEN STARTUP VALUATION & STANDARD VALUATION PRACTICES

Business valuation dramatically reduces investment uncertainty. It is still a science under development as markets change and more information becomes available. Since valuations are forward-looking, the practice still involves a high degree of judgement. Startup valuation is based on leading practices rather than set standards. Most early-stage valuation decisions take place during negotiations, nevertheless they Read more about DIFFERENCES BETWEEN STARTUP VALUATION & STANDARD VALUATION PRACTICES[…]

Raising Funds for your Stage: How Startup Fundraising is Different

It’s now easier than ever been to found a business. The cost of starting a simple online venture is low. This has opened up the possibility for many to become entrepreneurs, and the availability of capital also enables many new ground-breaking ideas to raise the needed funds at the early stages. However, the cost to Read more about Raising Funds for your Stage: How Startup Fundraising is Different[…]

BUSINESS VALUATION: WHAT ARE MY OPTIONS?

When deciding what type of company valuation you need, there are few options available. It usually depends on your specific situation, company size, information available (specifically when the valuation is ordered by an investor) and type of transactions, as well as the expected audience and negotiations. The purpose or transactions for which you may want a Read more about BUSINESS VALUATION: WHAT ARE MY OPTIONS?[…]

How to calculate the cost of your market expansion: Customer Acquisition Costs

  Once you have set a target number of customers to reach, how do you reach these customers? Now that you have projected your customer base, you can calculate your marketing and sales costs and split these costs into the different channels that you are using. By doing so, you can validate every channel and Read more about How to calculate the cost of your market expansion: Customer Acquisition Costs[…]

THE STRATEGY BASIS OF THE FINANCIAL PLAN

  After the market analysis, validation and drawing your business model, including your potential long-term strategy, it is time to put everything to test by creating financial projections. While the future is uncertain and trends change, we have a variety of data from the past to help us. The reality is that financial projections will Read more about THE STRATEGY BASIS OF THE FINANCIAL PLAN[…]

What kind of soil you need to grow your roots: Sizing the Market

Trees grow in size by first expanding their roots in the soil. Every specie of tree is different and it may need a different structure and acidity of the soil. Some need larger and deeper spaces to grow their roots to develop to their full potential, some need less. Different species grow at different speeds, Read more about What kind of soil you need to grow your roots: Sizing the Market[…]

YOUR VALUATION IS NOT FIXED IN STONE

As a valuation professional, explaining what value is and how you get to it, is sometimes a challenge. There are so many transactions in the market, especially at the early stages, that concepts have to be simplified to be able to negotiate quickly and effectively. The valuation then becomes a value that you agree on Read more about YOUR VALUATION IS NOT FIXED IN STONE[…]

Strategy planning for early-stage startups: How to reduce risks

Your ideal financing strategy is closely connected to your milestones. This is an example of milestones for a startup, this does not represent how funding rounds take place in all situations. Funding depends on a variety of factors. It‘s also possible to have multiple smaller seed rounds, as it‘s happening now in the market, and Read more about Strategy planning for early-stage startups: How to reduce risks[…]

Where are early-stage investments going?

Smart money from startup investors follows ever changing trends in terms of sector, region, stage, and instrument. Startup investors, including business angels, VCs, family offices and corporate VCs can invest directly into startup investment rounds, or join co-investment funds, syndicates or invest in other funds. Funds are increasingly set up as specialised sector funds. They Read more about Where are early-stage investments going?[…]

startup story

Is startup funding right for you?

Funding cycles and the startup story go hand in hand. Planning out the financing strategy is something that many founders overlook. When raising funds, possibilities are limited to the type of company that you have: so it’s very important to know what is available to you before you decide on a strategy, especially if the Read more about Is startup funding right for you?[…]

Business valuation calculators: to use or not to use?

There are a few companies out there offering automatic valuations for startups. While it seems like a good option for all those companies who can’t figure out how valuation works and what value to communicate to investors, using an automated model completely fails the scope of the valuation. There are three main reasons for this: Your financial Read more about Business valuation calculators: to use or not to use?[…]

Fundraising

How to start planning your fundraising campaign

There are many potentially great entrepreneurs with valid ideas, but often with little knowledge as to how to take the idea further with the limited resources they have available. Luckily there are now a variety of ways to fund businesses. All these options may be confusing at first. However, depending on the type of business Read more about How to start planning your fundraising campaign[…]

The process and documents needed when approaching investors

The length of the fundraising process varies, no necessarily based on the amount raised, but based on the founders’  and company’s experience. Founders that are very well connected will be able to raise money faster, while startups may find that as their business model becomes increasingly safer and the validation has taken place, funding rounds Read more about The process and documents needed when approaching investors[…]

Investing in Innovation

HOW THE EUROPEAN UNION INVESTS IN INNOVATIVE PROJECTS

Navigating through the countless EU projects for promoting investments into innovative companies can be challenging for entrepreneurs. The reality is that most of the direct financing takes place on a local level  – the best source to identify these financial intermediaries that have accessed European funding to finance local companies are listed directly on the official EU database, Read more about HOW THE EUROPEAN UNION INVESTS IN INNOVATIVE PROJECTS[…]

DAMODARAN ON NARRATIVE AND NUMBERS IN VALUATION

Aswath Damodaran’s webinar on “Narrative and Numbers: A Guide to Disciplined Story Telling and Imaginative Number Crunching” on Sageworks provided some very interesting insights into different approaches to valuation. Damodaran distinguishes between those people who are more comfortable with number crunching, and the storytellers. The ‘Numbers’ people tend to think that valuation is all about Read more about DAMODARAN ON NARRATIVE AND NUMBERS IN VALUATION[…]

THE INFORMATION BASE IN VALUATION

Before starting with your valuation you should establish a good information base, whether you’re doing it for your company internally or for an external client, which will save you time and prevent mistakes. This means going through a checklist on the assignment’s characteristics and collecting all key information. If you’re carrying out a valuation as an external Read more about THE INFORMATION BASE IN VALUATION[…]

DECODING THE VALUATION PROCESS

In a valuation, nothing can be viewed in isolation, you always need to consider the overall picture. However, the big picture is also made up of many sources, inputs, logical decisions and methods, without which the overall picture would no longer make sense. Because the value of a company is not to be viewed in isolation, Read more about DECODING THE VALUATION PROCESS[…]

AUSTRIAN, GERMAN AND ITALIAN VALUATION STANDARDS AT A GLANCE

Until recently few countries had released their own valuation standards. With the market demanding stronger valuation standards, many countries have started working on their own guidelines. The International Valuation Standards Council, for example, seeks to unify these standards. However, the local standards tend to go more into the technical valuation details. The OIV (Organismi Italiano di Read more about AUSTRIAN, GERMAN AND ITALIAN VALUATION STANDARDS AT A GLANCE[…]

WHO CAN VALUE YOUR COMPANY?

  Business valuation is a constantly evolving science, shaped by empirical research, opinions of leading experts and the judgement of the valuer. It is impossible to pinpoint the exact intrinsic value of a company, so all methods are aimed at detecting and quantifying as many factors as possible that can have an influence on the Read more about WHO CAN VALUE YOUR COMPANY?[…]