Startup Valuation (Controversy)
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Valuation is a key concept for startups/tech companiess. Presentation describes different ways of thinking about valuation of startups in the digital/lean world.
Startup Valuation (Controversy)
- 1. STARTUP VALUATION (CONTROVERSY) Tytus Cytowski, Managing Partner BITSPIRATION FESTIVAL KRAKOW, POLAND June 13, 2014
- 2. TYTUS CYTOWSKI Attorney at Law EDUCATION HARVARD LAW SCHOOL (LLM) WARSAW UNIVERSITY (Mag Iur) EXPERIENCE STARTUPS VENTURE FINANCING LICENSING ADVISOR STARTUP WISEGUYS (Estonia) TRACTION TRIBE (Hungary) DEFY VENTURES (NYC) 1
- 3. CYTOWSKI LLC Disclaimers Any US federal tax advice contained in this presentation is not intended to be used, and cannot be used, to avoid penalties under the Internal Revenue Code or to promote, market or recommend any transaction or matter addressed herein. This material is for informational purposes only and do not constitute advertising, a solicitation, or legal advice and should not be construed as legal advice for any purpose whatsoever. Information contained herein is not intended to create, and receipt thereof does not constitute formation of, an attorney-client relationship. 2
- 6. INSTAGRAM $1B SNAPSHOT $2 B NEST $2 B OCULOS $ 2 B WHATSAPP $ 19 B ESTIMOTE ? INTELCLINIC ? 5
- 7. STARTUP VALUATION DATA YC $5-$8 M ($6.4 M Average) Stanford Grad $1.5-$5 M ($3.3 M Average) Google Employee $2-$5 M ($3.7 M Average) Hardware $2.5-$6 M ($4.3 M Average) Mobile Security $6-$ 9M ($5.8 M Average) https://angel.co/valuations 6
- 8. 7 STARTUP VALUATION DATA POLAND $2.5-$4.1 M ($3 M Average) BULGARIA $500 G $2.8 M ($1.3 M Average) NYC $3-$5 M ($4.2 M Average) SILICON VALLEY $3.1 -$6 M ($4.7 M Average) https://angel.co/valuations
- 9. DEPENDS 8
- 10. LOW INTEREST RATES = SEARCH FOR YIELD = HIGH RISK ASSETS = ASSET PRICE UP = (FOREIGN) TECH STARTUPS = DISCONNECT/BUBBLE* 9 US MONETARY POLICY * Potential
- 11. DIGITAL REVOLUTION 10 SOFTWARE IS EATING UP THE WORLD PEAK OR VALLEY?
- 13. VALUATION MODELS - MARKET METHOD - ASSET METHOD - INCOME METHOD 12
- 15. 14 HIGHLY SUBJECTIVE* *VALUE OF PRIVATE VC MARKET NOT PUBLIC
- 18. FOUNDERS = FUTURE VALUE 17
- 19. ABILITY TO MEASURE MULTIPLES (P/E) WALL STREET 18
- 20. ABILITY TO GROW VERTICALS (REAL ESTATE) SILICON VALLEY 19
- 22. CONVERSION -> RETENTION-> ENGAGEMENT* *Lean methodology key concept for VC valuation models 21
- 24. MEASURE 20/30+ YEAR PERSPECTIVE* *Different from Wall Street 23
- 27. VALUATION DO NOT MATTER FOR EARLY STAGE Probability of getting to the next stage -Paul Graham* https://www.youtube.com/watch?v=2lcp0uZsY7 k 26
- 28. VALUATION = COST OF RUNNING EXPERIMENT plus 3 MONTH RUNWAY FOR FUNDRAISING* *http://venturehacks.com 27
- 29. FINANCING OF MISTAKES WITH O.P.M. (OTHER PEOPLES MONEY)28 VENTURE CAPITAL
- 30. VC MISTAKES* & PRICING** *LOSING PORTOFOLIO HAS TO MAKE MONEY ** SOLUTION INCREASE VALUATION OF WINNING STARTUPS 29
- 31. PRICE* & OWNERSHIP** *More Ownership More Value **Less Ownership Less Value 30
- 32. DILUTION IN NEXT ROUND* *EXIT VALUE ONLY TRUE TEST OF VALUE 31
- 33. FOUNDER + INVESTOR COLLUSION (BIAS) 32
- 35. LIKE US ON FACEBOOK! www.facebook/cytowskillc FOLLOW ON TWITTER @tcytowski 34