Crowdfunding & The JOBS Act: The Impact on Startup Valuations
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CROWDFUNDING & THE JOBS ACT: THE IMPACT ON STARTUP VALUATIONS Efrat Kasznik, Founder & President Foresight Valuation Group, LLC Crowdfunding, the JOBS Act, and the Future of Innovation Funding March 19, 2014
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Crowdfunding, the JOBS Act, and the Future of Innovation Funding -Startup Valuation Trends -Factors Affecting Startup Valuations -Startup Valuations and Crowdfunding -Rewards-Based Campaigns -Equity-Based Fundraising
Transcript of Crowdfunding & The JOBS Act: The Impact on Startup Valuations
CROWDFUNDING & THE JOBS ACT: THE IMPACT ON STARTUP VALUATIONS
Efrat Kasznik, Founder & President Foresight Valuation Group, LLC
Crowdfunding, the JOBS Act, and the Future of Innovation Funding
March 19, 2014
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Outline
¨ Startup Valuation Trends ¨ Factors Affecting Startup Valuations ¨ Startup Valuations and Crowdfunding
¤ Rewards-Based Campaigns ¤ Equity-Based Fundraising
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What’s In a Billion Dollars?
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Key Performance Indicators (KPI): The New Valuation Fundamentals
KPI = Measurable Success Factors
¤ User Engagement - active users ¤ # of Installs ¤ Customer Acquisition Cost (CAC) ¤ Customer Lifetime Value (LTV) ¤ Average Revenue Per User (ARPU) ¤ Customer Attrition (Churn Rate) ¤ Conversion Rate (funnel)
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High Pre-Revenue Startup Valuations
Raised $225M at $3.8B Valuation (Oct 2013)
$338M raised to date 70M active users $0 Revenues
Raised $50M at ~$2B Valuation (Dec 2013)
$123M raised to date 60M installs, 30M active users monthly 16.5M users and 350M photos shared daily $0 Revenues
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Factors Contributing to High Valuations
More Exits
In 2013
User Engagement
High Growth
Industries
More Funding Options
• Angels • VCs • Private Equity • Crowdfunding
• 230 IPOs; $55B US • 10k M&As deals; $100B US • Active Secondary Market
• Healthcare • Internet of Things • Social Media
$3.2B Valuation
Nest Labs
• # Active Users • # Installs/Subscriptions • Conversion Rate • Churn Rate
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The Startup Equity Valuation Timeline
Seed Funding
Stock Options
Series
A, B, C
M&A
IPO
Crowdfunding
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Reward v. Equity Based Crowdfunding: Valuation Considerations
Business Model Validation
REWARDS EQUITY
Creates Early Stage Comparables
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Rewards-Based Campaign: Business Model Validation
Customers
Production
Fulfillment Profit
Team
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Equity-Based Crowdfunding: Early-Stage Valuations Revealed
Financial Statements
Business Plan
Valuation
Public Financial Database Seed Funding Valuations 409A Valuations Employee Stock Options
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Equity Prices Likely To Go Up?
Pre-2005 Post 409A (1/1/2005) Post JOBS Act (End of 2014?)
10%
25-30%
?? Ratio of Common Stock to Preferred Stock Prices
THANK YOU!
Efrat Kasznik President, Foresight Valuation Group
[email protected] Office: 650-561-3374
www.foresightvaluation.com
Foresight Valuation Group © 2014
