foresight valuation july 7th les
Post on 21-Oct-2014
137 views
DESCRIPTION
TRANSCRIPT
CROWDFUNDING & THE JOBS ACT:THE IMPACT ON STARTUP VALUATIONS
Efrat Kasznik, Founder & PresidentForesight Valuation Group, LLC
Emerging Enterprises CommitteeMonthly Webinar
July 7, 2014
2Foresight Valuation Group © 2014
Outline
Startup Valuation Trends Factors Affecting Startup Valuations Startup Valuations and Crowdfunding
Rewards-Based Campaigns Equity-Based Fundraising
3Foresight Valuation Group © 2014
What’s In a Billion Dollars?
4Foresight Valuation Group © 2014
Key Performance Indicators (KPI): The New Valuation Fundamentals
KPI = Measurable Success Factors
User Engagement - active users # of Installs Customer Acquisition Cost (CAC) Customer Lifetime Value (LTV) Average Revenue Per User (ARPU) Customer Attrition (Churn Rate) Conversion Rate (funnel)
5Foresight Valuation Group © 2014
High Startup Valuations in 2013
Raised $225M at $3.8B Valuation (Oct 2013)
$338M raised to date70M active users$0 Revenues
Raised $50M at ~$2B Valuation (Dec 2013)
$123M raised to date60M installs, 30M active users monthly16.5M users and 350M photos shared daily$0 Revenues
6Foresight Valuation Group © 2014
Factors Contributing to High Valuations
More Exits
In 2013
User Engagement
High Growth Industri
es
More Fundin
g Options
• Angels• VCs• Private Equity• Crowdfunding
• 230 IPOs; $55B US• 10k M&As deals; $100B US• Active Secondary Market
• Healthcare• Internet of Things• Social Media
$3.2B Valuation
Nest Labs
• # Active Users• # Installs/Subscriptions• Conversion Rate• Churn Rate
7Foresight Valuation Group © 2014
The Startup Valuation Timeline
Seed Fundin
g
Stock Option
s
Series A, B, C
M&AIPO
Available Information
Low High
Crowdfunding
8Foresight Valuation Group © 2014
Reward v. Equity Based Crowdfunding:Valuation Considerations
Business Model Validation
REWARDS EQUITY
Creates Early Stage
Comparables
9Foresight Valuation Group © 2014
Rewards Based Crowdfunding:Key Assumptions Validation
Customers
Production
FulfillmentProfit
Team
10Foresight Valuation Group © 2014
Equity-Based Crowdfunding: Startups Valuations Revealed
• JOBS Act requires business plan and valuation
• Creates a set of comparable equity prices for investors & entrepreneurs
• May create issues for the pricing of stock options
• Competition with other funding options may drive stock prices up
Financial
Statements
Business Plan
Valuation
Public Financial Database
Seed Funding Valuations
409A Valuations
Employee Stock Options
11Foresight Valuation Group © 2014
Seed/Angel Funding:Median/Mean Round Size
Source: Halo Report 2013
12Foresight Valuation Group © 2014
Seed/Angel Funding:Pre-Money Valuation Range
Source: Halo Report 2013
13Foresight Valuation Group © 2014
More Transparency Leads to Higher Prices?
Pre-2005 Post 409A (1/1/2005) Post JOBS Act (End of 2014?)
10%
25-30%
??
Ratio of Common Stock to Preferred Stock Prices
THANK YOU!
Efrat KasznikPresident, Foresight Valuation
Office: 650-561-3374
www.foresightvaluation.com