1 venture capital method of valuation business plan preparation frank moyes college of business and...
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![Page 1: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/1.jpg)
1Venture Capital Method of Valuation
Business Plan PreparationBusiness Plan PreparationBusiness Plan PreparationBusiness Plan Preparation
Frank MoyesFrank MoyesCollege of Business and AdministrationCollege of Business and AdministrationUniversity of ColoradoUniversity of ColoradoBoulder, ColoradoBoulder, Colorado
![Page 2: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/2.jpg)
2Venture Capital Method of Valuation
Required Return on Required Return on InvestmentInvestment
SeedSeed 80%+ 80%+ Start-UpStart-Up
60%60% Early Stage Early Stage
50%50% Second Stage 40%Second Stage 40% Third Stage 30%Third Stage 30% BridgeBridge
25%25%
ROI 5 yr.Increase
19x 19x 10x10x 8x8x 5x5x 4x4x 3x3x
Bygraves & Zacharakis
![Page 3: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/3.jpg)
3Venture Capital Method of Valuation
Venture Capital Method Venture Capital Method Key AssumptionsKey Assumptions
Net ProfitNet Profit Valuation MultipleValuation Multiple
Price/EarningsPrice/Earnings Price/RevenuePrice/Revenue Price/EBITDAPrice/EBITDA Price/Seller’s Discretionary EarningsPrice/Seller’s Discretionary Earnings
Investor ROIInvestor ROI
![Page 4: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/4.jpg)
4Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million
Exit yearExit year 5th year5th year
RevenueRevenue $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million
![Page 5: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/5.jpg)
5Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million
Exit yearExit year 5th year 5th year
RevenueRevenue $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million
Growth RateGrowth Rate 20% 20%
P/E multipleP/E multiple 15x 15x
Company valueCompany value ? ?
![Page 6: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/6.jpg)
6Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million
Exit yearExit year 5th year5th year
RevenueRevenue $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million
Growth RateGrowth Rate 20% 20%
P/E multipleP/E multiple 15x 15x
Company valueCompany value $30 million$30 million
![Page 7: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/7.jpg)
7Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million
Exit yearExit year 5th year5th year
RevenueRevenue $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million
Growth RateGrowth Rate 20% 20%
P/E multipleP/E multiple 15x 15x
Equity valueEquity value $30 million$30 million
Required ROIRequired ROI ? ?
Required IncreaseRequired Increase
Required $ valueRequired $ value
![Page 8: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/8.jpg)
8Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million
Exit yearExit year 5th year5th year
RevenueRevenue $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million
Growth RateGrowth Rate 20% 20%
P/E multipleP/E multiple 15x 15x
Company valueCompany value $30 million$30 million
Required ROIRequired ROI 60% 60%
Required Increase Required Increase ? ?
Required $ valueRequired $ value
![Page 9: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/9.jpg)
9Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million
Exit yearExit year 5th year 5th year
RevenueRevenue $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million
Growth RateGrowth Rate 20% 20%
P/E multipleP/E multiple 15x 15x
Company valueCompany value $30 million$30 million
Required ROIRequired ROI 60% 60%
Required Increase Required Increase 10x 10x
Required $ valueRequired $ value ? ?
![Page 10: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/10.jpg)
10Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million
Exit yearExit year 5th year 5th year
RevenueRevenue $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million
Growth RateGrowth Rate 20% 20%
P/E multipleP/E multiple 15x 15x
Company valueCompany value $30 million$30 million
Required ROIRequired ROI 60% 60%
Required Increase Required Increase 10x 10x
Required $ valueRequired $ value $10 million$10 million
% of company required% of company required ? ?
![Page 11: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/11.jpg)
11Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million
Exit yearExit year 5th year 5th year
RevenueRevenue $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million
Growth RateGrowth Rate 20% 20%
P/E multipleP/E multiple 15x 15x
Company valueCompany value $30 million$30 million
Required ROIRequired ROI 60% 60%
Required Increase Required Increase 10x 10x
Required $ valueRequired $ value $10 million$10 million
% of company required% of company required 33% 33%
Pre-money valuationPre-money valuation ? ?
Post-money valuationPost-money valuation ? ?
![Page 12: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/12.jpg)
12Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million
Exit yearExit year 5th year 5th year
RevenueRevenue $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million
Growth RateGrowth Rate 20% 20%
P/E multipleP/E multiple 15x 15x
Company valueCompany value $30 million$30 million
Required ROIRequired ROI 60% 60%
Required Increase Required Increase 10x 10x
Required $ valueRequired $ value $10 million$10 million
% of company required% of company required 33% 33%
Pre-money valuationPre-money valuation $2 million$2 million
Post-money valuationPost-money valuation $3 million$3 million
![Page 13: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/13.jpg)
13Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million $1 million$1 million
Exit yearExit year 5th year 5th year 5th year5th year
RevenueRevenue $20 million$20 million $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million $ 2 million$ 2 million
Growth RateGrowth Rate 20% 20% 30% 30%
P/E multipleP/E multiple 15x 15x ? ?
Company valueCompany value $30 million$30 million ? ?
Required ROIRequired ROI 60% 60% ? ?
Required Increase Required Increase 10x 10x ? ?
Required $ valueRequired $ value $10 million$10 million ? ?
% of company required% of company required 33% 33% ? ?
Pre-money valuationPre-money valuation $2 million$2 million ? ?
Post-money valuationPost-money valuation $3 million$3 million ? ?
![Page 14: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/14.jpg)
14Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million $1 million$1 million
Exit yearExit year 5th year 5th year 5th year5th year
RevenueRevenue $20 million$20 million $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million $ 2 million$ 2 million
Growth RateGrowth Rate 20% 20% 30% 30%
P/E multipleP/E multiple 15x 15x 20x 20x
Company valueCompany value $30 million$30 million ? ?
Required ROIRequired ROI 60% 60% ? ?
Required Increase Required Increase 10x 10x ? ?
Required $ valueRequired $ value $10 million$10 million
% of company required% of company required 33% 33%
Pre-money valuationPre-money valuation $2 million$2 million
Post-money valuationPost-money valuation $3 million $3 million
![Page 15: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/15.jpg)
15Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million $1 million$1 million
Exit yearExit year 5th year 5th year 5th year5th year
RevenueRevenue $20 million$20 million $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million $ 2 million$ 2 million
Growth RateGrowth Rate 20% 20% 30% 30%
P/E multipleP/E multiple 15x 15x 20x 20x
Company valueCompany value $30 million$30 million $40 million $40 million
Required ROIRequired ROI 60% 60% 60% 60%
Required Increase Required Increase 10x 10x 10x 10x
Required $ valueRequired $ value $10 million$10 million ? ?
% of company required% of company required 33% 33% ? ?
Pre-money valuationPre-money valuation $2 million$2 million ? ?
Post-money valuationPost-money valuation $3 million$3 million ? ?
![Page 16: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/16.jpg)
16Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million $1 million$1 million
Exit yearExit year 5th year 5th year 5th year5th year
RevenueRevenue $20 million$20 million $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million $ 2 million$ 2 million
Growth RateGrowth Rate 20% 20% 30% 30%
P/E multipleP/E multiple 15x 15x 20x 20x
Company valueCompany value $30 million$30 million $40 million $40 million
Required ROIRequired ROI 60% 60% 60% 60%
Required Increase Required Increase 10x 10x 10x 10x
Required $ valueRequired $ value $10 million$10 million $10 million$10 million
% of company required% of company required 33% 33% 25% 25%
Pre-money valuationPre-money valuation $2 million$2 million ? ?
Post-money valuationPost-money valuation $3 million$3 million ? ?
![Page 17: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/17.jpg)
17Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million $1 million$1 million
Exit yearExit year 5th year 5th year 5th year5th year
RevenueRevenue $20 million$20 million $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million $ 2 million$ 2 million
Growth RateGrowth Rate 20% 20% 30% 30%
P/E multipleP/E multiple 15x 15x 20x 20x
Company valueCompany value $30 million$30 million $40 million $40 million
Required ROIRequired ROI 60% 60% 60% 60%
Required Increase Required Increase 10x 10x 10x 10x
Required $ valueRequired $ value $10 million$10 million $10 million$10 million
% of company required% of company required 33% 33% 25% 25%
Pre-money valuationPre-money valuation $2 million$2 million $3 million $3 million
Post-money valuationPost-money valuation $3 million$3 million $4 million $4 million
![Page 18: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/18.jpg)
18Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million $1 million$1 million
Exit yearExit year 5th year 5th year 5th year5th year
RevenueRevenue $20 million$20 million $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million $1 million$1 million
Growth RateGrowth Rate 20% 20% 10% 10%
P/E multipleP/E multiple 15x 15x ? ?
Company valueCompany value $30 million$30 million
Required ROIRequired ROI 60% 60%
Required Increase Required Increase 10x 10x
Required $ valueRequired $ value $10 million$10 million
% of company required% of company required 33% 33%
Pre-money valuationPre-money valuation $2 million$2 million
Post-money valuationPost-money valuation $3 million$3 million
![Page 19: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/19.jpg)
19Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million $1 million$1 million
Exit yearExit year 5th year 5th year 5th year5th year
RevenueRevenue $20 million$20 million $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million $1 million$1 million
Growth RateGrowth Rate 20% 20% 10% 10%
P/E multipleP/E multiple 15x 15x 10x 10x
Company valueCompany value $30 million$30 million ? ?
Required ROIRequired ROI 60% 60%
Required Increase Required Increase 10x 10x
Required $ valueRequired $ value $10 million$10 million
% of company required% of company required 33% 33%
Pre-money valuationPre-money valuation $2 million$2 million
Post-money valuationPost-money valuation $3 million$3 million
![Page 20: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/20.jpg)
20Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million $1 million$1 million
Exit yearExit year 5th year 5th year 5th year5th year
RevenueRevenue $20 million$20 million $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million $1 million$1 million
Growth RateGrowth Rate 20% 20% 10% 10%
P/E multipleP/E multiple 15x 15x 10x 10x
Company valueCompany value $30 million$30 million $10 million $10 million
Required ROIRequired ROI 60% 60% ? ?
Required Increase Required Increase 10x 10x ? ?
Required $ valueRequired $ value $10 million$10 million ? ?
% of company required% of company required 33% 33%
Pre-money valuationPre-money valuation $2 million$2 million
Post-money valuationPost-money valuation $3 million$3 million
![Page 21: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/21.jpg)
21Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million $1 million$1 million
Exit yearExit year 5th year 5th year 5th year5th year
RevenueRevenue $20 million$20 million $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million $1 million$1 million
Growth RateGrowth Rate 20% 20% 10% 10%
P/E multipleP/E multiple 15x 15x 10x 10x
Company valueCompany value $30 million$30 million $10 million $10 million
Required ROIRequired ROI 60% 60% 60% 60%
Required Increase Required Increase 10x 10x 10x 10x
Required $ valueRequired $ value $10 million$10 million $10 million $10 million
% of company required% of company required 33% 33% ? ?
Pre-money valuationPre-money valuation $2 million$2 million ? ?
Post-money valuationPost-money valuation $3 million$3 million ? ?
![Page 22: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/22.jpg)
22Venture Capital Method of Valuation
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain Unicycles
Venture Capital MethodVenture Capital Method
Mountain UnicyclesMountain UnicyclesInvestmentInvestment $1 million$1 million $1 million$1 million
Exit yearExit year 5th year 5th year 5th year5th year
RevenueRevenue $20 million$20 million $20 million$20 million
Net profit (10%)Net profit (10%) $2 million$2 million $1 million$1 million
Growth RateGrowth Rate 20% 20% 10% 10%
P/E multipleP/E multiple 15x 15x 10x 10x
Company valueCompany value $30 million$30 million $10 million $10 million
Required ROIRequired ROI 60% 60% 60% 60%
Required Increase Required Increase 10x 10x 10x 10x
Required $ valueRequired $ value $10 million$10 million $10 million $10 million
% of company required% of company required 33% 33% 100% 100%
Pre-money valuationPre-money valuation $2 million$2 million ?! ?!
Post-money valuationPost-money valuation $3 million$3 million ?! ?!
![Page 23: 1 Venture Capital Method of Valuation Business Plan Preparation Frank Moyes College of Business and Administration University of Colorado Boulder, Colorado](https://reader036.vdocuments.site/reader036/viewer/2022062407/56649d2a5503460f949ff0f3/html5/thumbnails/23.jpg)
23Venture Capital Method of Valuation
Venture Capital Method Venture Capital Method Key AssumptionsKey Assumptions
Net ProfitNet Profit P/E MultipleP/E Multiple Investor ROIInvestor ROI