Bootstrapping Procedure for Valuation--Example from the Presentation Slide

Inception (Year 0)
Shareholders Investment Shares Ownership% Pre Money Post Money
Founders - 1,000,000.00 100% 0 920,000.00
Seed
Seed Extension
Series A
Series B
Total 1,000,000
 Seed (Year 1)
Investment Shares Price per shareOwnership% Pre Money Post Money
- 1,000,000.00 70% 920,000.00
400,000.00 434,782.61 0.92 30% 920,000.00 1,320,000.00

1,434,783
 Seed Extension (Year 2)
Investment Shares Price per share OwnershipPre Money
Gap before - 1,000,000.00 49%
next round of 400,000.00 434,782.61 21%
investment 800,000.00 623,818.53 1.28 30% 1,840,000.00

2,058,601
 Series A (Year 3.5)
Post Money Investment Shares Price per sOwnershipPre Money
Gap before - 1,000,000.00 36%
next round
of 400,000.00 434,782.61 16%
2,640,000.00 investment 800,000.00 623,818.53 23%
4,000,000.00 686,200.38 5.83 25% 12,000,000

2744801.51229
 Series B (Year 5)
Post Money Investment Shares Price per sOwnershipPre Money
Gap before - 1,000,000.00 29.1%
next round
of 400,000.00 434,782.61 12.7%
investment 800,000.00 623,818.53 18.2%
16,000,000.00 4,000,000.00 686,200.38 20.0%
10,000,000.00 686,200.38 14.573 20.0% 40,000,000
15,200,000.00 3,431,001.89
 Exit
Post MoneyYears to ExitOnwershipeValue IRR Return Multiple
7 29.1% 29,146,005.51
6 12.7% 12,672,176.31 78% 31.7
5 18.2% 18,181,818.18 87% 22.7
3.5 20.0% 20,000,000.00 58% 5
50,000,000 2 20.0% 20,000,000.00 41% 2
100,000,000.00 6.6

https://seraf.zendesk.com/hc/en-us/articles/2031434
n-us/articles/203143460-How-are-the-Exit-Multiple-and-IRR-calculated-
Valuation Calculation Worksheet
Assumptions
Terminal Value Disc Rate Years
Investment amount = 100,000 100,000,000 50% 6

Step 1: Estimate current value

Present Value of company today 8,780,000.00 11.390625 8,779,149.52

Start of period 8,780,000.00

Yr 1 13,170,000.00
Yr 2 19,755,000.00
Yr 3 29,632,500.00
Yr 4 44,448,750.00
Yr 5 66,673,125.00
Yr 6 100,009,687.50

Step 2: Calculate the required ownership % RFOP) Investment Amt/PV Alternatively

1.14% 1.14%

Step 3: Estimate Future dilution 42% (same as prior example in the deck) 12.6/30

Step 4: Calculate Required Current Ownership % 1.14%/42% 1.14/x=12.6/30, x = 2.71%

(investment ownership % grossed up to incorporate future dilution) 2.71% (need to calculate an ownership number that when diluted by 42% a

Step 5: Calculate valuation for round This is another method to calculate the initial equity percentage
(Current valuation reduced to incorporate future dilution) $8.8m * 42%
(in this case reduced by 42%) 3,687,600.00

Ownership with 100k investment 100000/3687600 investment amount/real value without dilution
2.71%
 Inv Amt
100,000

Retention ratio, the company has been diluted to 42%.

/x=12.6/30, x = 2.71%
at when diluted by 42% arrives at the required % ownership)

al equity percentage