OpenUp: How Valuations Work
Valuations are a critical business measurement because it places a financial value or assessment for what has been accomplished by the company, to date. It’s the change (hopefully growth) in valuations over time that all shareholders benefit from because the gains in valuation will directly increase the value of their stock.
Valuations are influenced by capital infusion (fundraising), profitability, business model, IP, growth in sales, market trends, and assets including equipment, land, employees, etc. among other variables. Valuations are complex and negotiable, but once committed, they are indelible until another funding or auditing moment happens.
Investors use pre-money valuations (the valuation amount before the fundraise) to determine the amount of equity needed to secure in exchange for any capital injection.
Additionally, valuations are required by law when a startup implements an employee stock ownership plan (ESOP) for tax assessments under the wealth tax or gift tax acts. This is an annual process managed under SEC’s 409A.
There are several approaches on identifying valuations, and each approach will create a valuation range. For startups that are pre-revenue, the options are a bit restricted because the financial outcome is riskier than established companies.
This webinar, hosted by Tanner Anderson, Co-founder of Mezy, helps clients understand how valuations work, the different approaches, and how to use valuations when negotiating term sheets. Mezy provides Investment Analysis as a Service – offering valuable insight into business, market trends, and investment opportunities as well as investment deliverables for investors and entrepreneurs.
WHAT TO EXPECT:
Tanner Anderson will cover the basics of valuations and also cover the various approaches that are more common to early-stage and pre-revenue companies. He will explain how valuations change over time and the dangers of having your company over-valued.
You will learn when you need to re-access your valuation before asking for capital-tied investment. You will also learn more on how valuations and valuation caps can be a negotiation point while fundraising from investors.
This is a presentation with questions answered by Tanner throughout.
Meet The Expert:
Tanner co-founded Mezy in 2019 after spending time at Podium, one of Utah’s fastest growing tech unicorns. He has experience in both Venture Capital and Growth Capital firms focused on all industries and stages of companies. He was an analyst at Clarke Capital Partners, a growth equity firm specializing in buyouts, value add and IP investments. He also was a founding member of Utah Valley University’s student led venture capital firm the “Wolverine Fund” and led its team to 2nd place at the National Venture Capital Investment Competition at UNC.
Tanner and his wife have one child and live in Saratoga Springs, UT.
Tara Spalding, MD at BoomStartup
will be moderating the webinar and encouraging participants to ask questions to Tanner.