Venture Capital Valuation Spreadsheet

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Venture Capital Valuation Spreadsheet Powered By Docstoc
					NewCo Inc.

Pro Forma Cap Table
                       Start-up Capitalization                                        Series A Funding
                                                                        Series A     Series A     Post-Money     FD
                                  Common          Total      %        Investment     Preferred        Total      %
Founders                           1,000,000     1,000,000   100.0%                                  1,000,000 75.0%     Founders diluted by 25%
Options Granted                                          0     0.0%                                         -    0.0%
Options Available                                        0     0.0%                                         -    0.0%
Investor 1                                               0     0.0%   $ 1,000,000        333,333       333,333 25.0%    Investor desires 25%
Investor 2                                               0     0.0%   $       -                 -           -    0.0%   ownership.
Investor 3                                               0     0.0%   $       -                 -           -    0.0%
Total                              1,000,000     1,000,000   100.0%   $ 1,000,000        333,333     1,333,333 100.0%

Pre-Money Valuation                                                   $ 3,000,000
Price / Share                                                         $       3.00
Total $ Invested                                                      $ 1,000,000
Post-Money Valuation                                                  $ 4,000,000
Date                                                                     6/30/2009
NewCo Inc.

Pro Forma Cap Table
                       Start-up Capitalization                                    New Option Pool                                     Series A Funding
                                                                                    Pre-Money                       Series A       Series A     Post-Money         FD
                                  Common           Total     %        New Options      Total            %         Investment       Preferred       Total           %
Founders                           1,000,000     1,000,000   100.0%                    1,000,000         80.0%                                    1,000,000          60.0%
Options Granted                                          0     0.0%                            0          0.0%                                           -            0.0%          Including options in the pre-money calculation is
Options Available                                        0     0.0%      250,000         250,000         20.0%                                      250,000          15.0%          very common in term sheets.
Investor 1                                               0     0.0%                            0          0.0%    $   1,000,000       416,667       416,667          25.0%
Investor 2                                               0     0.0%                            0          0.0%    $         -                -           -            0.0%
Investor 3                                               0     0.0%                            0          0.0%    $         -                -           -            0.0%
Total                              1,000,000     1,000,000   100.0%      250,000      1,250,000         100.0%    $   1,000,000       416,667     1,666,667         100.0%

Pre-Money Valuation                                                               True Pre-Money: $   2,400,000   $   3,000,000       Note the lower price per share despite same pre-
Price / Share                                                                                                     $         2.40      money valuation due to the new options. This values
Total $ Invested                                                                                                  $   1,000,000       the pre-money company prior to options at $2.4
Post-Money Valuation                                                                                              $   4,000,000
Date                                                                                                                   6/30/2009
NewCo Inc.

Pro Forma Cap Table
                       Start-up Capitalization                                   New Option Pool                                         Series A Funding                             New Option Pool                                     Series B Funding
                                                                                  Pre-Money                           Series A       Series A      Post-Money                           Pre-Money                             Series B     Series B   Post-Money    FD
                                 Common            Total     %        New Options    Total                %         Investment       Preferred        Total      %        New Options      Total              %             Investment    Preferred       Total     %       % Preferred
Founders                          1,000,000      1,000,000   100.0%                   1,000,000            80.0%                                     1,000,000    60.0%                    1,000,000           54.7%                                   1,000,000    36.5%       0.0%
Options Granted                                          0     0.0%                           0             0.0%                                            -      0.0%                            0            0.0%                                          -      0.0%       0.0%
Options Available                                        0     0.0%      250,000        250,000            20.0%                                       250,000    15.0%       161,000        411,000           22.5%                                     411,000    15.0%       0.0%
Investor 1                                               0     0.0%                           0             0.0%    $   1,000,000       416,667        416,667    25.0%                      416,667           22.8%    $     1,000,000      182,767     599,433    21.9%      45.1%      Note who controls a majority of Preferred. This is
Investor 2                                               0     0.0%                           0             0.0%    $         -                -            -      0.0%                            0            0.0%    $     4,000,000      731,067     731,067    26.7%      54.9%      important for voting rights.
Investor 3                                               0     0.0%                           0             0.0%    $         -                -            -      0.0%                            0            0.0%    $           -               -         -      0.0%       0.0%
Total                             1,000,000      1,000,000   100.0%      250,000     1,250,000            100.0%    $   1,000,000       416,667      1,666,667   100.0%       161,000     1,827,667           100.0%    $     5,000,000      913,833 2,741,500     100.0%     100.0%

Pre-Money Valuation                                                                 True Pre-Money: $   2,400,000   $   3,000,000                                                       True Pre-Money: $   9,119,095   $ 10,000,000
Price / Share                                                                                                       $         2.40                                                                                      $        5.47
Total $ Invested                                                                                                    $   1,000,000                                                                                       $ 5,000,000
Post-Money Valuation                                                                                                $   4,000,000                                                                                       $ 15,000,000
Date                                                                                                                     6/30/2009                                                                                          6/30/2010
NewCo Inc.

Pro Forma Cap Table
                             Start-up Capitalization                                          New Option Pool                                           Series A Funding                                      New Option Pool                                       Series B Funding
                                                                                                Pre-Money                            Series A       Series A      Post-Money                                    Pre-Money                              Series B      Series B   Post-Money
                                        Common           Total           %         New Options     Total                 %         Investment       Preferred        Total             %         New Options       Total              %              Investment     Preferred       Total         %         % Preferred
Founders                                 1,000,000     1,000,000         100.0%                    1,000,000              80.0%                                     1,000,000           60.0%                      1,000,000           54.7%                                     1,000,000       36.5%          0.0%
Options Granted                                                0           0.0%                            0               0.0%                                            -             0.0%                              0            0.0%                                            -         0.0%          0.0%
Options Available                                              0           0.0%       250,000        250,000              20.0%                                       250,000           15.0%         161,000        411,000           22.5%                                       411,000       15.0%          0.0%
Investor 1                                                     0           0.0%                            0               0.0%    $   1,000,000       416,667        416,667           25.0%                        416,667           22.8%     $     1,000,000        182,767    599,433       21.9%         45.1%
Investor 2                                                     0           0.0%                            0               0.0%    $         -                -            -             0.0%                              0            0.0%     $     4,000,000        731,067    731,067       26.7%         54.9%
Investor 3                                                     0           0.0%                            0               0.0%    $         -                -            -             0.0%                              0            0.0%     $           -                -         -         0.0%          0.0%
Total                                     1,000,000    1,000,000         100.0%       250,000     1,250,000              100.0%    $   1,000,000       416,667      1,666,667          100.0%         161,000     1,827,667           100.0%     $     5,000,000        913,833 2,741,500       100.0%        100.0%

Pre-Money Valuation                                                                              True Pre-Money: $     2,400,000   $   3,000,000                                                                True Pre-Money: $   9,119,095    $ 10,000,000
Price / Share                                                                                                                      $         2.40                                                                                                $        5.47
Total $ Invested                                                                                                                   $   1,000,000                                                                                                 $ 5,000,000
Post-Money Valuation                                                                                                               $   4,000,000                                                                                                 $ 15,000,000
Date                                                                                                                                    6/30/2009                                                                                                    6/30/2010

Exit Waterfall
                                                                                                                  High Scenario                                                                                                 Low Scenario
Exit Value                                                                                                        $100,000,000                                                                                                   $ 12,000,000
                                                                                                                                        Value per share if everyone converted to comon.                                                                 Lower than preferences of B but higher than A.
Value Per Share (as-converted basis)                                                                              $      36.48                                                                                                   $        4.38
Exit Date                                                                                                             6/30/2011
                                                                                                                                        Note it is greater than preferences of A and B.                                              6/30/2011

Liquidation Preferences                        Date     Dividend       Per Share       Shares                                                             Date        Dividend       Per Share         Shares
Series B 1x Straight Preferred                                  $           5.47      913,833 $      5,000,000                                                                $           5.47        913,833 $     5,000,000
Series B Dividend                         6/30/2010          0% $            -        913,833 $            -                                          6/30/2010            0% $            -          913,833 $           -
                                                                                                                                                                                                                                                          B exercises preference .
Total Series B Preference                                          $      5.47                   $   5,000,000    $          -                                                   $       5.47                   $   5,000,000   $   5,000,000
Convert to Common?                                                     TRUE                                                                                                          FALSE

Series A 1x Straight Preferred                                  $          2.40       416,667    $   1,000,000                                                                $           2.40        416,667   $   1,000,000
Series A Dividend                         6/30/2009          0% $           -         416,667    $         -                                          6/30/2009            0% $            -          416,667   $         -
                                                                                                                                                                                                                                                          A converts to common.
Total Series A Preference                                          $       2.40                  $   1,000,000    $          -                                                   $        2.40                  $   1,000,000   $         -
Convert to Common?                                                     TRUE                                                                                                          TRUE

Total Preferences                                                                                                 $          -                                                                                                  $   5,000,000

Remaining Common Proceeds                                                                                         $100,000,000                                                                                                  $   7,000,000

Common Proceeds                                                                         Shares    % of Proceeds                                                                                         Shares % of Proceeds
Series B                                                                               913,833            33.3%   $ 33,333,333         A/B convert to common and participate in Common                     -            0.0%    $         -               B does not participate in Common proceeds.
Series A                                                                               416,667            15.2%   $ 15,198,492         proceeds.                                                       416,667         22.8%    $   1,595,842
Common                                                                               1,000,000            36.5%   $ 36,476,382                                                                       1,000,000         54.7%    $   3,830,020
Options                                                                                411,000            15.0%   $ 14,991,793                                                                         411,000         22.5%    $   1,574,138
Total                                                                                2,741,500          100.0%    $100,000,000                                                                       1,827,667       100.0%     $   7,000,000

Total Proceeds                                                                      Per Share     % of Proceeds
Series B                                                                           $     36.48            33.3%   $   33,333,333                                                                 $       5.47           41.7%   $   5,000,000
Series A                                                                           $     36.48            15.2%   $   15,198,492                                                                 $       3.83           13.3%   $   1,595,842
Common                                                                             $     36.48            36.5%   $   36,476,382                                                                 $       3.83           31.9%   $   3,830,020
Options                                                                            $     36.48            15.0%   $   14,991,793                                                                 $       3.83           13.1%   $   1,574,138
Total                                                                                                   100.0% $100,000,000                                                                                           100.0% $ 12,000,000

Multiple of Cost
Series B                                                                                                                    6.7x                                                                                                          1.0x            Important criteria of how well the investment
Series A                                                                                                                   15.2x                                                                                                          1.6x            performed. VCs typically aim for 4-10x returns.

Check if Proceeds are above Preference:
Series B                                                                                                                     OK                                                                                                           OK
                                                                                                                                                                                                                                                          Important check to make sure investor proceeds are
Series A                                                                                                                     OK                                                                                                           OK
                                                                                                                                                                                                                                                          greater than or equal to their preferences.
NewCo Inc.

Pro Forma Cap Table
                              Start-up Capitalization                                            New Option Pool                                           Series A Funding                                          New Option Pool                                      Series B Funding
                                                                                                   Pre-Money                            Series A       Series A      Post-Money                                        Pre-Money                              Series B     Series B   Post-Money
                                         Common           Total           %         New Options       Total                 %         Investment       Preferred        Total                 %         New Options       Total              %              Investment    Preferred       Total      %      % Preferred
Founders                                  1,000,000     1,000,000         100.0%                      1,000,000              80.0%                                     1,000,000               60.0%                      1,000,000           54.7%                                    1,000,000    36.5%       0.0%
Options Granted                                                 0           0.0%                              0               0.0%                                            -                 0.0%                              0            0.0%                                           -      0.0%       0.0%
Options Available                                               0           0.0%         250,000        250,000              20.0%                                       250,000               15.0%         161,000        411,000           22.5%                                      411,000    15.0%       0.0%
Investor 1                                                      0           0.0%                              0               0.0%    $   1,000,000       416,667        416,667               25.0%                        416,667           22.8%     $     1,000,000       182,767    599,433    21.9%      45.1%
Investor 2                                                      0           0.0%                              0               0.0%    $         -                -            -                 0.0%                              0            0.0%     $     4,000,000       731,067    731,067    26.7%      54.9%
Investor 3                                                      0           0.0%                              0               0.0%    $         -                -            -                 0.0%                              0            0.0%     $           -               -         -      0.0%       0.0%
Total                                     1,000,000     1,000,000         100.0%         250,000     1,250,000              100.0%    $   1,000,000       416,667      1,666,667              100.0%         161,000     1,827,667           100.0%     $     5,000,000       913,833 2,741,500    100.0%     100.0%

Pre-Money Valuation                                                                                 True Pre-Money: $     2,400,000   $   3,000,000                                                                    True Pre-Money: $   9,119,095    $ 10,000,000
Price / Share                                                                                                                         $         2.40                                                                                                    $        5.47
Total $ Invested                                                                                                                      $   1,000,000                                                                                                     $ 5,000,000
Post-Money Valuation                                                                                                                  $   4,000,000                                                                                                     $ 15,000,000
Date                                                                                                                                       6/30/2009                                                                                                        6/30/2010

Exit Waterfall
                                                                                                                     High Scenario                                                                                                     Low Scenario
Exit Value                                                                                                           $100,000,000                                                                                                       $ 12,000,000
Value Per Share (as-converted basis)                                                                                 $      36.48                                                                                                       $        4.38
Exit Date                                                                                                                6/30/2011                                                                                                          6/30/2011

Liquidation Preferences                        Date      Dividend       Per Share         Shares                                                               Date        Dividend       Per Share           Shares
Series B Full Participation                                      $           5.47        913,833 $      5,000,000                                                                  $           5.47          913,833 $     5,000,000
Series B Dividend                         6/30/2010           0% $            -          913,833 $            -                                           6/30/2010             0% $            -            913,833 $           -
Total Series B Preference                                           $       5.47                    $   5,000,000    $    5,000,000                                                   $       5.47                     $   5,000,000   $   5,000,000
Convert to Common?                                                      FALSE                                                                                                             FALSE

Series A 1x Straight Preferred                                   $          2.40         416,667    $   1,000,000                                                                  $             2.40        416,667   $   1,000,000
Series A Dividend                         6/30/2009           0% $           -           416,667    $         -                                           6/30/2009             0% $              -          416,667   $         -
Total Series A Preference                                           $       2.40                    $   1,000,000    $          -                                                     $          2.40                  $   1,000,000   $         -
Convert to Common?                                                      TRUE                                                                                                              TRUE

Total Preferences                                                                                                    $    5,000,000                                                                                                    $   5,000,000

Remaining Common Proceeds                                                                                            $ 95,000,000                                                                                                      $   7,000,000

Common Proceeds                                                                            Shares    % of Proceeds                                                                                             Shares % of Proceeds
Series B                                                                                  913,833            33.3%   $   31,666,667        Investor receives preference and participates in                   913,833         33.3%    $   2,333,333
Series A                                                                                  416,667            15.2%   $   14,438,568        Common, effectively "double dipping".                              416,667         15.2%    $   1,063,894
Common                                                                                  1,000,000            36.5%   $   34,652,562                                                                         1,000,000         36.5%    $   2,553,347
Options                                                                                   411,000            15.0%   $   14,242,203                                                                           411,000         15.0%    $   1,049,425
Total                                                                                   2,741,500          100.0%    $   95,000,000                                                                         2,741,500       100.0%     $   7,000,000

Total Proceeds                                                                          Per Share    % of Proceeds                                                                                          Per Share % of Proceeds
Series B                                                                            $      40.12             36.7%   $   36,666,667        Percentage of proceeds is an important way                   $        8.02         61.1%    $   7,333,333
Series A                                                                            $      34.65             14.4%   $   14,438,568        investors look at ownership.                                 $        2.55          8.9%    $   1,063,894
Common                                                                              $      34.65             34.7%   $   34,652,562                                                                     $        2.55         21.3%    $   2,553,347
Options                                                                             $      34.65             14.2%   $   14,242,203        In a big exit, participation doesnt matter as much.          $        2.55          8.7%    $   1,049,425
Total                                                                                                      100.0% $100,000,000             The smaller the exit, the more effect participation                               100.0% $ 12,000,000
                                                                                                                                           has.
Series B
Effective Pre-Money Valuation                                                                                        $ 8,636,364
Effective Post-Money Valuation                                                                                       $ 13,636,364

Multiple of Cost
Series B                                                                                                                       7.3x                                                                                                              1.5x
Series A                                                                                                                      14.4x                                                                                                              1.1x


Check if Proceeds are above Preference:
Series B                                                                                                                        OK                                                                                                               OK
Series A                                                                                                                        OK                                                                                                               OK

				
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Description: This is an excel spreadsheet that anybody can use to calculate the valuation of a venture capital backed startup and also perform returns analysis.
Mark Suster Mark Suster Partner www.grpvc.com
About I'm a partner in a venture capital firm based in Los Angeles. Before this I was a 2x entrepreneur having built and sold two companies from scratch. The second was bought by Salesforce.com where I became VP Product Management.