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Basic start up valuation - how much r u worth

Slideshow about Basic start up valuation - how much r u worth by Eric Tachibana

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Basic start up valuation - how much r u worth

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  1. BASIC START-UP VALUATION HOW MUCH ARE YOU WORTH?

  2. Introduction: dude, don't freak

  3. I know what you are saying…

  4. I know what you are saying… Oh god. Anything but finance.

  5. But, Seriously. Don't sweat it. I know what you are saying… Oh god. Anything but finance.

  6. But, Seriously. Don't sweat it. I know what you are saying… Oh god. Anything but finance. Finance is actually quite simple

  7. But, Seriously. Don't sweat it. I know what you are saying… Oh god. Anything but finance. Finance is actually quite simple when you focus on what matters.

  8. And you can't avoid it.

  9. And you can't avoid it. Because if you look weak

  10. And you can't avoid it. Because if you look weak If you actually let excel know you're scared

  11. And you can't avoid it. Because if you look weak If you actually let excel know you're scared Then you'll be on your ass

  12. So let's talk about valuation

  13. So let's talk about valuation Since you can’t avoid it

  14. So let's talk about valuation Since it's not actually that hard Since you can’t avoid it

  15. So let's talk about valuation Since it's not actually that hard Since you can’t avoid it And since it is one of those topics that absatively cannot be delegated to finance

  16. valuation is the process of defining what your start-up is worth! definition

  17. You do that in 3 simple ways valuation is the process of defining what your start-up is worth! definition

  18. You do that in 3 simple ways valuation is the process of defining what your start-up is worth! you're worth what you own definition

  19. You do that in 3 simple ways valuation is the process of defining what your start-up is worth! you're worth what you own definition you're worth what you can earn in the future

  20. You do that in 3 simple ways valuation is the process of defining what your start-up is worth! you're worth what you own you're worth what you can earn in the future definition you're worth what the market says you're worth

  21. Let's go through each of those…

  22. Part 1 You're worth what you own

  23. Valuation based on actual assets is probably the simplest and most intuitive

  24. You are worth exactly how much you have in your pocket! * (Advanced reader: What is in your balance sheet today?)

  25. Actually, What you’re worth right now can be divided into 2 major categories of value

  26. Tangible assets inTangible assets Inventory Cash or financial assets Buildings, land, vehicles, equipment Computers, desks, chairs (anything you can hock) Accounts receivable (what people owe you) Agreements that could be novated (franchize or distribution agreements) Copyrights Patents Trademarks Trade secrets Brand / reputation Unique knowledge

  27. So the first thing you need to do is figure out how much you can sell all the tangible & intangible assets for

  28. But…

  29. You’ll probably also have some liabilities too

  30. Rental agreements • Accounts payable • Bank loans • Unpaid salary • Salary liabilities (notice periods) • Tax owed • Bonds • Leases • Pension contribution • Product warranties • Other Contingent liability • Shareholder debt

  31. You need to sum up all these liabilities as well

  32. And when you do that, you’re ready to value your firm: Firm value = (Tangible + intangible assets) - liabilities

  33. Simple right?

  34. Well simple comes at a cost

  35. Of the 3 methods, this results in the lowest valuation

  36. Which is why, it is really only used during liquidations

  37. Part 2 You're worth what you can earn in the future

  38. Of course the assets & liabilities method does not work well when you are pitching a true start-up which has nothing other than a big dream

  39. Because you have no assets

  40. In that case, we need to value the business based upon what is possible in the future

  41. But wait? Why would anyone place a value on possible future money

  42. Well it turns out that possible future money does have value

  43. Depending on how possible, and how much future money we’re talking about

  44. Think of it this way

  45. If your mother told you she’d give you 20 dollars tomorrow if you did 1 hour of chores today, would you do it?

  46. Sure you would

  47. What a good child

  48. You trust mom. You need the dough tomorrow. So you’ll pay in advance

  49. You see. promised Future money does have value today

  50. How about if a bank told you that they’d give you a guaranteed 110 dollars in a month if you deposited 100 dollars today?

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