1 / 38

Tiecon 2010 Money, Money, Money How Much Do I Need? How Long Will It Last? How To Be Convincing

Tiecon 2010 Money, Money, Money How Much Do I Need? How Long Will It Last? How To Be Convincing. Deborah Kranz. 35 years of Financial Experience Fortune 100 Corps, VC’s & startups Motorola, Syva, Saga, 3Com, EY, KPMG, Interwest & Mayfield Fund

majed
Download Presentation

Tiecon 2010 Money, Money, Money How Much Do I Need? How Long Will It Last? How To Be Convincing

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Tiecon 2010Money, Money, MoneyHow Much Do I Need?How Long Will It Last?How To Be Convincing

  2. Deborah Kranz • 35 years of Financial Experience • Fortune 100 Corps, VC’s & startups • Motorola, Syva, Saga, 3Com, EY, KPMG, Interwest & Mayfield Fund • Clients- Admob, ArcSight, Aruba Networks, Palo Alto Networks, Xros, Kace, Aster Data, Clearwell, Mimosa, Rhapsody, Lookout, Kior, Calera • Significant Experience with Financial Plans

  3. Starting Your Company Where to Begin

  4. Why You Need A Model • Determine amounts and timing of cash needed to reach milestones and cash flowbreakeven • Determine the sources and uses of cash from startup to breakeven • To help investors understand the ROI & Exit 4

  5. The Plan Process

  6. Developing A Financial Model • Knowledge Prerequisites • Sources of Comparative Information • Presentation Format • Development Steps • Using the Model • Frequent Problems 6

  7. Knowledge Prerequisites Understand Your Industry • What Problem Am I Solving? • What Products & Services Am I Providing • Understand & Analyze Your Customers & Markets • Understand & Analyze Competitors 7

  8. Knowledge of Products & Services • Articulate problem you are solving & size of problem • What is the value proposition I can offer? • Understand & determine technology road map and specify key milestone dates • Understand & determine pricing for products • What are my competitive advantages? • Are there barriers to entry? • What are milestone dates for revenue 8

  9. Knowledge of Markets & Customers • What are the markets and how large? • Who are the customers & what is their geographic distribution? • What is my potential market share? • How long is the sales cycle? • What are my sales channels? • Who are the competitors? 9

  10. Analysis of Competitors • Research & understand your competitors • Public Information • Bankers, attorneys, advisors • How do you differentiate yourself from competitors 10

  11. Sources of Comparative Data • Market Studies • Industry report (Hoovers,1st Research) • Investment bankers (Goldman, Morgan Stanley) • Big 4 CPA industry reports • Google 11

  12. More Sources of Comparative Data • EDGAR System • S-1,10K (financial data, business) • Accessible through Yahoo Finance • Google “Company Name S-1” • Financial Consultants (Kranz & Assoc) • Comparative Start Ups 12

  13. SalesforceS-1 Information from Edgar 13

  14. Salesforce S-1 Information from Edgar 14

  15. Presentation Format • Key Financial Statements • Income Statement • Cash Flow • Timing differences • Equipment, Inventory • Other Important Data • Headcount • Cash Burn • Cash • Capital Expenditures if significant • Inventory, if applicable 15

  16. Format of Income Statement 16

  17. Format of Cash Flow 17

  18. How To Use The Model • Go to www.kranzassoc.com • Click on Resource Tab Useful Articles • Tiecon Model Available May 20, 2010 • Input Cells are Blue 18

  19. Definitions • Cost of Sales – Costs directly attributable to sales • Gross Margin – Revenue minus Cost of Sales • Operating Expenses (OpX) – Company Expenses except for Cost of Sales • Capital Expenditures (CapX) – Cost of Equipment • Cash Burn – Cash going out of company 19

  20. Steps in Developing Plan • Forecasting bookings and revenue • Forecasting cost of goods sold-COGS • Forecasting operating expenses-OPX • Forecasting capital expenditures-CAPX • Forecasting other uses of cash • Forecasting sources of cash 20

  21. Bookings & Revenue Assumptions • Number of units sold • Average selling price per unit • Timing of orders vs. delivery • Bookings versus Revenue • Timing of customer payments 21

  22. COGS Assumptions Costs Related to Revenue Generation • Manufacturing or Operations Dept Costs • Materials or Hosting & Bandwidth • QA & Testing • Purchasing 22

  23. Department Assumptions - OpX • Research & Development • Sales & Marketing • General & Administrative 23

  24. Research & Development Assumptions Costs to achieve technical milestones • Staffing • Recruiting • Consulting & Outside Services • Development Costs 24

  25. Sales & Marketing Expenses required for sales forecast • Staffing • Recruiting • Travel • Consulting & Outside Services • Advertising & Promotion 25

  26. General & Administrative • Staffing • CEO, Finance/Accounting, HR, IT • Recruiting • Consulting & Outside Services • Legal (General & IP) • Audit and Tax • Facilities (rent, utilities, communications) • Supplies, other 26

  27. Staffing Assumptions$ in 000’s

  28. Gross Margin Assumptions$ in 000’s 28

  29. Other Uses of Cash • Operating losses ([SALES-COGS-OPX] <0) • CAPX • Other assets (deposits, prepaid expenses, accounts receivable, inventory) • Debt payments 29

  30. Forecasting CAPX Outlining your Equipment Needs • Computers and Software • Industry Specific Equipment • Leasehold Improvements • Furniture 30

  31. Sources of Cash • Operating profit ([SALES-COGS-OPX] >0) • Equity financing • Debt financing • Customer prepayments • Accounts payable 31

  32. Debt Financing • Growth capital loans • Equipment loans • Equipment leases • Account Receivables lines of credit 32

  33. Operating Expenses$ in 000’s 33

  34. Sources & Uses of Cash $ in 000’s 34

  35. Financings, Cash Burn, Cash Balance Cumulative Financings Cumulative Cash Burn Cash Balance 35

  36. Common Forecast Problems • Time to market longer than forecast • R&D staff ramp slower than forecast • CAPX needs higher than forecast • Sales ramp slower than forecast • (both units & ASP) • COGS higher than forecast 36

  37. Formed in 1995 • 40 experienced professionals • Cross all industries & stages • Experience with: • Over 200 companies all stages • Over 20 Venture Capital firms • Over 15 IPO’s • Over 20 Mergers & Acquisitions • Cost effective solution for startups

  38. QUESTIONS? 38

More Related