Replacement cost refers to the amount of money a business must currently spend to replace an essential asset
with one of the same or higher value. An example of replacement costs would be the salaries that the founders
have stopped receiving because they decided to develop the startup and leave their job, or any other research
and development costs that have been invested in the development of the company’s product, service or technology
Cost of goods sold includes all of the costs and expenses directly related to the production of goods.
The cost of labor is the sum of all wages paid to employees, as well as the cost of employee benefits and
payroll taxes paid by an employer.
Sales & marketing expenses includes the costs to sell and deliver products and services and the costs to manage
Other costs includes all other operating expenses not included in the previous sections.
Capital expenditures (CapEx) are funds used by a company to acquire, upgrade, and maintain physical assets such
as property, plants, buildings, technology, or equipment.
Interest Bearing Debt means the total amount of outstanding indebtedness of the Companies for borrowed money
(including, without limitation, bank debt, equipment debt, capital lease obligations, bank overdrafts and any
other indebtedness for borrowed money).
Debt-like items Include other interest-bearing financial items not included in the previous section (e.g. lease
obligations, pension obligations…).
Please make sure to enter the values closest to the valuation date
Inventory is the term for the goods available for sale and raw materials used to produce goods available for
Trade receivable is the balance of money due to a firm for goods or services delivered or used but not yet paid
for by customers.
Trade payable are amounts due to vendors or suppliers for goods or services received that have not yet been paid
Net operating losses are losses incurred in business pursuits. They allow a company to carry over a tax loss to
future years to offset a profit.
A financing round is considered external if any of the investors participating in the round is not a shareholder
of the company.
· The Mid-Year convention treats all cash flows generated during the year as if they had been generated
in the same amount during each month of the year. It is suitable for businesses with low to medium volatility
· The End-of-Year convention treats all cash flows generated during the year as if they had been
generated at the end of the fiscal year. It is suitable for businesses that generate most of their cash flows at
the end of their fiscal year.
Investors may have a limited capacity to diversify the company's specific risk (e.g. the founder of a company
invests a relevant amount of his/hers capital in the company, a venture capital has the capacity to have a
partially diversified portfolio) and may demand compensation for at least part of that risk.
Excess cash is the amount of cash beyond what the company needs to perform its daily operations.
The year in which you plan to execute your business exit strategy. This could be the year in which you expected
the company/investment to meet its profit target.
A fixed asset is a long-term tangible piece of property or equipment that a firm owns and uses in its operations
to generate income. Fixed assets most commonly appear on the balance sheet as property, plant, and equipment
An intangible asset is an asset that is not physical in nature. Goodwill, brand recognition and intellectual
property, such as patents, trademarks, and copyrights, among others, are all intangible assets. Intangible
assets only appear on the balance sheet if they have been acquired previously.
Reference valuation based on comparable company valuations that serves as a starting point for calculating value
through the scorecard approach.
Also known as the investment multiple or multiple of money invested, it is the ratio of the realized and
unrealized fund/equity value divided by the capital invested in the fund/company.
Pre-money multiple = Last pre-money valuation/ Total equity raised
Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare
the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a
particular investment, relative to the investment’s cost. To calculate ROI, the benefit (or return) of an
investment is divided by the cost of the investment.
Given the current central banks policy and its impact on sovereign bond yields, you can apply an interest rate
floor where the risk free cannot be less than 0%.
• Idea stage main characteristics:
· Concept/ ideas for the business model
· Founding team and business
· Creating a MVP (Minimum viable product)
· No cash flows
· Initial small funding
• Startup stage main characteristics:
· Define business model
· Hire new team members
· Testing and feedback on MVP
· Define first marketing strategies
· Small and in general negative cash flows
• Early stage main characteristics:
· Adjust business model where needed
· Employee growth
· Product/service revenue starts to increase
· Competition increases
· Focus on production/sales channel/ implementation of marketing strategies
· Aiming towards break-even point (i.e. first stable positive cash flows)
• Growth stage main characteristics:
· Expansion to new markets or products
· Team structure become more complex
· Product/service recurring revenue / high growth in revenue
· Focus on marketing strategies increases
· Cash flows become positive and more stable