SAPNE @AIC-SMUTBI – Week 14 on “Valuation Demystified” with Mr. Suman Sengupta.
Mr. Suman is the Head of professional services at #LeadAngelsNetwork. He is a Chartered Accountant and Economics graduate with 20 years of finance, strategic planning and treasury experience in the industrial, telecom and IT industries.
Lead Angels is India’s first privately owned angel network founded by a team of three originally from IIT Bombay in 2014 with the aim of improving early-stage investment outcomes.
Topics discussed:
1. Raising Money
2. Term Sheets – Common Financing Terms
3. Valuation Techniques – Discounted Cash Flow, Multiplier Method, Comparable Method and Scorecard Method
Common Deal Terms -:
1. Amount – How much money to raise?
2. Valuation
3. Structures
4. Liquidation Preference
5. Pre-emptive Rights
6. Anti-Dilution
7. Reserved Matters
8. Tag-along Rights
9. Drag-along Rights
How to value a Startup?
What factors influence valuation?
Quantum of funds
Valuation at formation
Valuation after ESOPS & VC Round
Key takeaways:
Valuation
1. Valuation is not everything – avoid a zero-sum game
2. Follow the etiquette – reputation follows a person for a lifetime
3. Be considered and honest – Investor relationship is long, make it an enjoyable one
For business
1. Micro-manage cash
2. No verbal agreement
3. Maintain good records
4. No surprises
