Financial investment plan for new ventures
23
Financial investment plan for new ventures Benno Groosman MScBA www.groosman.info October 5, 2015 LaunchBase Maastricht
-
Upload
benno-groosman -
Category
Small Business & Entrepreneurship
-
view
974 -
download
1
Transcript of Financial investment plan for new ventures
Financial investment plan for new ventures
Benno Groosman MScBAwww.groosman.infoOctober 5, 2015LaunchBase Maastricht
Content• Scope• Milestone planning• Investment table• Assumptions• Cashflow and liquidity• Revenue and profits• Valuation
www.groosman.info
Scope• The financial plan is part of your business plan
– See for example http://www.slideshare.net/benno_groosman/writing-an-effective-business-plan-49179966
• In this presentation I focus on new ventures that need (high) initial investments and deal with future uncertainty and risk– Though, the basics work for other types of ventures too
• This is an introduction; your financial plan requires a lot of practice and updating.
• There are many ways of presenting your numbers; I show how I did it in my (funded) business plans and included these examples.
www.groosman.info
Milestone planningA milestone is the achievement of a significant step in your venture planning, which adds value to your venture.
• Define the milestones in your startup plan• Determine the amount of money you need to reach
each milestone• Match milestones with available funding sources• Can you combine the milestones for funding?
www.groosman.info
Titel- en inhoudopmaak met lijst
www.groosman.info
Download at:www.milestonebasedfunding.com
Investment table• The milestone planning gives you an indication of the amount of money you need and when you need this
• In your business plan you don’t only present the total costs of each milestone, but you also split it to the category of costs (e.g. R&D, salary, office, materials)
www.groosman.info
Example investment table medtech (type of costs)
www.groosman.info
Note: you can define your own categories, this is just an example.
Assumptions• After the milestone planning and the investment table
you have an idea of the amount of money you need to raise
• In order to raise money you have to show financial projections for the future
• For these projections you have to make estimates of costs and revenues
• In new ventures these estimates are assumptions• The number is not the most important, the
assumptions you made to get to this number is!www.groosman.info
Assumptions (example)“For the cash flow prognosis a conservative, base scenario was chosen. Only from 2018 we calculate revenues out of a sale of initially 3 to 20 products per month by end 2020 (target price €2000 start and €1500 end of this period). End 2017 we expect to have IP license income and production deals with strategic partners (of which one already signed a first right of refusal).The costs for maintenance of our patents are included. The IP license costs are also included. A 25% cost for production is taken of the product sales. As it is a medical product, certification costs are taken into account. The overhead costs consist of rent, office, administrative and regular insurance costs. Paying back loans is included in the prognosis.”
www.groosman.info
Template prognosis cashflow
www.groosman.info
Cashflow is the moment that the money reaches or leaves your bank account (this is timed differently than revenue or costs).You can define your own cash inflow and outflow categories, but keep the number of posts limited.
Cashflow = SUM(cashflow in – cashflow out)Liquidity = Start number bank account + cashflow
Liquidity• The liquidity (money on your bank account and cash)
is crucial for a startup, this determines the survival of the venture
• For this reason the prognosis per month is required• A negative liquidity gives the need for additional
funding (on top of the funding need that came from your investment table)
• What is the extra funding needed on the next slide?
www.groosman.info
Liquidity (example)
www.groosman.info
Although the liquidity at the end of the year is -47,7k, the lowest number is -62,5k and therefor this is the minimal required extra funding amount (on top of the 100k + 83,2k in the cashflow statement)
Example 5-year cashflow and liquidity statement
www.groosman.info
Download at:www.bit.ly/cashflowfinplan
Revenue and profits• If you agree on a sale or purchase today, the revenue or
cost occurs today• The cashflow in or out, occurs days to months later though• Therefor is your cashflow and liquidity statement not the
same as your revenue, profit and loss statement• For example: a product you deliver to a customer at 15-12-
2015 with a 3 week payment term, does not show up in your 2015 cashflow in, but does show up in the revenues that year
• But: the costs for making that products (cashflow out and cost) usually do both occur in 2015
www.groosman.info
Valuation• Your financial prognoses can give an indication on
valuation• For this you can also refer to http://
www.slideshare.net/benno_groosman/how-to-close-an-investment-deal-2015 from sheet 26
• On the next slides we will focus on the discounted cashflow method
www.groosman.info
Discounted cashflow• Take the total cashflow for each year• In the 5 year prognosis at
www.bit.ly/cashflowfinplan this is €18.800; € 153.500; € 87.615; -€ 14.963 € 113.460 in year 1, 2, 3, 4 and 5
• The discount rate is -0,15 (15 percent)• =18.800*0,85+153.500*0,85^2+87.61
5*0,85^3+-14.963* 0,85^4+113.460*0,85^5
• So, the DCF is €223.223 in 5 years• This number is not totally fair, as it also
includes the funding in these 5 years www.groosman.info
www.groosman.info
Thanks for your attention!Please feel free to contact me
Benno Groosman MScBA
Email: [email protected]: www.groosman.infoTwitter: www.twitter.com/Benno_Groosman Slideshare:www.slideshare.net/benno_groosman
