Valuation Statement and Methodology October 23 , 2015

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Presentation transcript:

Valuation Statement and Methodology October 23 , 2015

Agenda Discussion Methodology Overview Venture Capital Method Scorecard Method Market Comparables (Multiples) Summary 2

Methodology Overview TikaMobile will use 3 valuation methods widely accepted within the Angel and VC community to determine early and late stage startup valuation VC Method: Uses terminal value and risk based IRR to determine discounted present value. Scorecard Method: Sum value of 5 key value drivers multiplied by median pre-money valuation Comparables (most used): Industry comps of multiples to determine present value 3

Venture Capital Method Pre-money Valuation = Post money Valuation – Investment amount Where: Post Money Valuation = TV ÷ ROI TV (Terminal Value) = Annualized MRR x Exit Multiple ROI = IRR (Typically 30% - 70%) VC Discount Rate by Investment Round* *Guide to Entrepreneurship & Venture Capital, Fuerst & Geiger

VC Method Analysis Base TikaMobile Valuation: $8.8MM (MRR only) We add Services Revenue at 1x multiple for total Valuation = $8.8MM + $2.1MM = $10.9MM

Scorecard Method Uses key value driver comparisons to determine sum of factors score. The score is then multiplied with median pre-money valuation to determine company valuation Typically used for early stage and late seed startups. 6 key value drivers for startups and weighting: Strength of Management Team 30% Size of Opportunity 25% Product/Technology 15% Competitive Environment 10% Marketing/Sales/Partnerships 10% Other Factors (customer feedback) 10%

Scorecard Method Analysis Step 1: Determine Scorecard factor Step 2: Median Pre-Money Valuation Step 3: Calculate Valuation Sum of Factors = 1.1075 2015 Median Pre-money = $8MM Pre-money = 1.1075 x $8MM TikaMobile Valuation = $8.9MM Source: WSGR Entrepreneurs Report 1H 2015

Comparables Method 2015 Median SaaS Multiple = 5x 10 year Median SaaS Multiples Industry specific actual multiples are used to determine valuation Most commonly used method by VC community Valuation = Market Multiple x Annual MRR 2015 Median SaaS Multiple = 5x Source: Techcrunch

Comparables Analysis - Comps SaaS Industry Actuals Closest Comps by Industry: Callidus (3x) Veeva (8.4x)

Comparable Analysis - Final We will use a standard VC practice of using a discounted investment multiple (to the median) of 3x-4x applied to forward looking revenue for a startup

Summary The average of the three valuation methods is significantly higher than our proposed valuation: 1. VC Method Valuation (Base): $10.9MM 2. Scorecard Method Valuation: $8.9MM 3. Comparables Method (Base): $13.8MM Averaged Pre-Money Valuation = $11.2MM Proposed TikaMobile Pre-Money Valuation = $8MM