What documents to show investors at different stages

What documents should business owners present to investors at different stages of the business? This is one of the most important question to solve before embarking on a fundraising round or an exit. It can also save money and effort, as well as enhancing your confidence in front of investors when you’re going through this Read more about What documents to show investors at different stages[…]

SOFTWARE Investment Report

The world of software is comprehensive and has been one of the fastest changing sectors over the last decade. Here we’ll look into how many sub-sectors, with their own unique business models, have emerged from the use of software, where the industry is headed, and analyse key financial information such as market size, multiples and Read more about SOFTWARE Investment Report[…]

THE SECTORS OF THE FUTURE: where to take your strategy to raise the value of your business in the post-lockdown world

The last couple of year have brought about unprecedented changes in both human behaviour and industry outlook. Two years ago I discussed the tech trends to expect in year 2020 and beyond, so today I’m going to analyse whether those predictions turned out to be true, how those same industries are adapting to this new Read more about THE SECTORS OF THE FUTURE: where to take your strategy to raise the value of your business in the post-lockdown world[…]

WHAT INVESTORS LOOK FOR IN A FINANCIAL PLAN

We routinely create financial models for startup founders and also seasoned entrepreneurs who are getting ready to face investors. What they want is obviously to present their company in a way that is going to land them an investment, and a financial plan is one of those must-haves, at least in many of the more Read more about WHAT INVESTORS LOOK FOR IN A FINANCIAL PLAN[…]

SEED STAGE VALUATION METHODS

For a standard valuation, applying the market method means extracting multiples from comparable transactions or comparable stock-listed companies to estimate the current value of the company being valued. This cannot apply to seed stage startups for obvious reason: No stock-listed company can be comparable to a startup Multiples cannot be used at this stage as Read more about SEED STAGE VALUATION METHODS[…]

HOW TO CALCULATE YOUR STARTUP’S EXIT VALUE

In order to value a company that is an acquisition target, or that can be potentially sold in the near future, we use the market approach, which involves analysing comparable transactions and comparable stock-listed companies. In the case of early-stage startups, this market approach cannot be used as the company is too young to be Read more about HOW TO CALCULATE YOUR STARTUP’S EXIT VALUE[…]

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, the 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 require Read more about LAYING OUT YOUR STRATEGIC ROADMAP[…]

Future startup investments

2020+ TECH TRENDS

It’s the beginning of a new year and decade. Startup trends change fast, some are more durable and some change like the wind. Just a few months ago, the world looked completely different. I began analysing the new trends at the beginning of the year, and now mid-summer, still in the middle of a lockdowns, Read more about 2020+ TECH TRENDS[…]

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?[…]

startup ecosystem

CAN THE LOCAL BUSINESS CULTURE DETERMINE WHAT THE NEXT STARTUP HUB WILL BE?

As many world economies develop and join the ranks of developed countries, and as many third-world countries develop fast and start bringing unique innovations to world markets, it’s fair to wonder if their startup hubs can ever reach the level of Silicon Valley. Maybe that would be a stretch, but there are new startup ecosystems Read more about CAN THE LOCAL BUSINESS CULTURE DETERMINE WHAT THE NEXT STARTUP HUB WILL BE?[…]

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[…]

WHAT IS THE SPIRIT ANIMAL OF YOUR COMPANY?

We have heard much about the so-called unicorns since Aileen Lee first coined the term 6 years ago, that we’ve forgotten about real companies. The term unicorn refers to private startups that have reached 1-billion dollar in valuation. These are companies that have grown beyond any reasonable expectations. But let’s be honest, unicorns, even if Read more about WHAT IS THE SPIRIT ANIMAL OF YOUR COMPANY?[…]

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 THE 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 THE OPTIONS?[…]

CUSTOMER ACQUISITION COSTS: How to calculate the cost of your market expansion.

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 see Read more about CUSTOMER ACQUISITION COSTS: How to calculate the cost of your market expansion.[…]

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[…]

SIZING THE MARKET: What kind of soil do you need to grow your business’s roots?

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 SIZING THE MARKET: What kind of soil do you need to grow your business’s roots?[…]

WHERE DO UNICORNS COME FROM?

What was once a myth and rarity is now an everyday story. ‘Unicorns’ are private startups whose valuations have reached $ 1 billion +. Reading out the mythological background of the unicorn out of curiosity, the King of Ethiopia claimed that “it is impossible to take this ferocious beast alive; and that all its strength Read more about WHERE DO UNICORNS COME FROM?[…]

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?[…]

WHAT IS VALUE?

It is not always straightforward what value or valuation really means. In the startup world, everyone is talking about it, tech news are filled with funding round valuation analysis and exit stories. Yet the talk often only touches the surface of what there is to know about the valuation of early-stage investments, or even the Read more about WHAT IS VALUE?[…]

HOW ENERGY ACCESS CAN OPEN THE DOORS TO DIGITALISATION IN AFRICA: The solution of TREND Solar

Energy access in Sub-Saharan Africa Almost one in five of the world’s population don’t have access to electricity, 600 million thereof live in Sub-Saharan Africa. This represents around 70-75% of the population in the most affected countries. The problem is difficult to tackle, and the Africa Progress Panel, a group of experts led by Kofi Read more about HOW ENERGY ACCESS CAN OPEN THE DOORS TO DIGITALISATION IN AFRICA: The solution of TREND Solar[…]

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[…]