5. Types of Investment
Source Value of Investment Time of Entry
FFFF /
Angel
1 CR to 5 CR 0 - 24 Months
VC 2 CR to 200 CR 18 - 60 Months
PE > 50 CR 7 - 10 Years
IPO > 100 CR 5+ Years
6. Some Milestones
Source Age Revenue
Valuation
Investor
Venture
Launched
0 - 6 Months 0 20 - 50 Lacs FFFF
Product
Launch - Few
Paying Cusomers
6 - 12 Months
Early Revenue
Small
1 - 2 CR
FFFF / Individual
Angels
Stable
Business -
Regular
Customers Found
12 - 18 Months 15 - 30 Lacs 2 - 5 CR
FFFF / Angels /
Seed Funds
Product-
Market Fit -
Consistent
Customer Growth
18 - 24 Months 25 Lacs - 1 CR 4 - 10 CR
Angels / Seed
Funds / Some VCs
Business
Model Fit - Clear
Growth Path
24 - 36 Months 1 CR - 5 CR 10 CR - 50 CR Venture Funds
9. Valuation Models
โข Discounted Cash Flow
โข Forecasts several years of revenue and expenses
โข Discount the resulting cash flow to present value with the
expected rate of return
โข Cost to Recreate
โข Usually a make Vs buy decision
โข Snapdeal - ebay
10. Valuation by Angels and Funds
โข Typically the basis of valuation is the exit
โข Every fund has a target and an exit value in mind,
they look at see what they need to take to achieve
this
โข They also look at the future rounds of dilution which
may be needed and factor that into the valuation
that they demand
11. Example
โข Fund Deployment required - 10 Crores
โข 5 Year Profit target of the company being invested in - 75
Crores
โข 5 Year target valuation of Business based on projected
Profit - 750 Crores
โข Target for fund returns in 5 years - 10X or 100 Crore
โข Dilution asked is 100/750 = 13.33% + margin for dilution
12. ~ Ann Landers
Too many people today know the price of
everything and the value of nothing.
13. Download the Presentation at:
http://www.slideshare.net/viveksrini
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