SPONSORED BY SPARK LABS,
The Startup Station presents:
INTRODUCTION TO FINANCIAL MODELING & VALUATION FOR EARLY STAGE STARTUPS
No prior finance experience is necessary. Excel & Powerpoint materials are provided after class.
Welcome: 6:00 pm - 6:15 pm
Income Statement Overview: Definitions & Important Ratios: 6:15 pm - 6:35 pm
Modeling Revenues & Costs: 6:35 pm - 7:05 pm
Balance Sheet Overview: 7:05 pm -7:25 pm
Modeling Working Capital, PP&E, Break-Even Analysis: 7:25 pm - 7:45 pm
Break: 7:45 pm - 8:00 pm
Valuation Models for Pre-Revenue Startups: 8:00 pm - 9:00 pm
INTRODUCTION TO FINANCIAL MODELING FOR PRE-REVENUE STARTUPS: 6:15 pm - 7:45 pm
Why create financial projections when it is all a guess? Many entrepreneurs & small business owners have trouble making estimates & reducing the uncertainty in which they operate to a limited set of variables within a structured model. Their mistake is how they define the objective they aim to accomplish.
The goal of financial projections is not to guess the future. That is simply not possible. Rather, the goal is to define the company's strategy for the next 2-5 years & create a mathematical representation of that strategy in the form of a financial model.
In this workshop, we will discuss a framework that will allow you to do that.
Specifically we will address:
1. What information the financial model can give you & why it is necessary to build it? We will also discuss what aspects of your financial model are important to investors & why.
2. Income Statement Basics: Structure & definitions, key financial & operating ratios that measure operational & financial health of the company.
The crux of the modeling is an ability to make good assumptions. Anyone can build a mathematical formula & propagate it forward, but the output is only as good as the inputs.
3. Revenues Assumptions: How to define justifiable & achievable revenue assumptions, what research needs to be done in order to figure out what those assumptions need to be & what strategic decisions you need to make to forecast how those assumptions change over time.
4. Costs Assumptions: How to identify & estimate relevant fixed & variable costs as well as cost drivers.
5. Balance Sheet Basics: Structure & definitions. Focus on PP&E & Working Capital.
6. Break-even analysis: Identifying the point in time at which your business becomes profitable.
VALUATION MODELS FOR PRE-REVENUE STARTUPS: 8:00 pm - 9:00 pm
In this workshop we will cover eight different ways to value pre-revenue companies.
Specific models include:
1. Venture Capital Method - most popular2. Discounted Cash Flow or NPV method3. The Chicago Method4. The Dave Berkus Valuation Model5. Bill Payne's Model6. The Risk Factor Summation Model7. Replacement Method or "All-In" Method8. The Rule of Thirds
We will discuss one example for each.
We will also cover how to estimate the company's terminal value, WACC (weighted average cost of capital), & Free Cash Flow.
Presenter: Victoria Yampolsky, CFA
Founder of the Startup Station Meetup