You need to calculate the present value of a startup SAAS company (technology) which asks for 2-3M investment, and propose the right deal structure. 

 

Currently there are 2 owners, one invested 400K (2/3 of the company), another with 200K (1/3 of the company).

 

There are 200K convertible note, accrued interest, rolled up at 1% per month, convert into equity at next financing round subject to a valuation cap of $16M

 

Please use venture method of valuation and DCF, compare the pros and cons:

 

You have the following  financial information, you can make estimations, but note it is considered a risky investment. 

 

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Revenue Cost of Sales Administrative Expenses Net Profit before tax Tax Net Profit after Tax Chang in net working Capital Yr1 0 0 0 500 -500 -500 0 Yr2 500 200 300 1000 -700 -700 200 Yr3 3000 1400 1600 2400 -800 -800 1000 Yr4 9000 2400 6600 6000 600 600 800 Yr5 28000 4000 24000 8000 16000 2920 13080 800 Revenue Cost of Sales Administrative Expenses Net Profit before tax Tax Net Profit after Tax Chang in net working Capital Yr1 0 0 0 500 -500 -500 0 Yr2 500 200 300 1000 -700 -700 200 Yr3 3000 1400 1600 2400 -800 -800 1000 Yr4 9000 2400 6600 6000 600 600 800 Yr5 28000 4000 24000 8000 16000 2920 13080 800

Answer rating: 100% (QA)

Venture Method The venture method of valuation is based on the idea that the value of a company is determined by its potential for future growth This method involves estimating the companys potential ... View the full answer