Growth and Valuation Analysis of SME Instrument.

Ref.
Ares(2019)3654261 - 06/06/2019
Growth and valuation analysis of

SME Instrument.
Due date of deliverable M28 (31.12.2018)
Actual submission date M32 (6.06.2019)
Start date of project 01.09.2016
Project duration 30 months
Work package WP4
Tasks 4.2-4.3
Name of lead contractor for this deliverable APRE-CDTI
Author Luis Guerra-Antonio Carbone
Version Final
Dissemination level (according to H2020) Public
ACCESS4SMES project has received funding from the European Union’s Horizon 2020 research and
innovation programme under Grant Agreement number 723120
SMEI assessment: How do SME grow?
www.access4smes.eu
Publication Information:
This report was produced under the framework of Access4SMEs, the official network for Horizon 2020 National Contact Points (NCP) for Small
medium-sized enterprises - SMEs and Access to risk finance (A2RF). ACCESS4SMEs’ prime objective is to provide support and specialised
services to the network of SMEs and A2RF NCPs. For enquiries regarding this report please contact us at: sme@apre.it
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TABLE OF CONTENT
EXECUTIVE SUMMARY: ............................................................................................................................ 4

1 BACKGROUND....................................................................................................................................... 5
2 METHODOLOGY ................................................................................................................................... 6
2.1 EQUIDAM QUESTIONNAIRE. ................................................................................................................................ 6
2.1.1 Team .............................................................................................................................................................. 6
2.1.2 Business model .............................................................................................................................................. 7
2.1.3 Product and market ....................................................................................................................................... 7
2.1.4 IP and legal ................................................................................................................................................... 7
2.2 EQUIDAM FINANCIALS. ....................................................................................................................................... 7
2.3 EQUIDAM VALUATION METHODOLOGIES. ........................................................................................................... 8
2.3.1 Scorecard method. ......................................................................................................................................... 8
2.3.2 Checklist method ........................................................................................................................................... 9
2.3.3 Venture Capital method................................................................................................................................. 9
2.3.4 Discounted cash flow methods ...................................................................................................................... 9
2.4 COLLECTION OF CASES. .................................................................................................................................... 10
3 RESULTS................................................................................................................................................ 12
3.1 SAMPLE CHARACTERIZATION. .......................................................................................................................... 12
3.2 GROWTH ANALYSIS. ......................................................................................................................................... 13
3.2.1 Product/service maturity ............................................................................................................................. 13
3.2.2 Business element maturity ........................................................................................................................... 14
3.2.3 Employment and turnover ........................................................................................................................... 15
3.2.4 Qualitative dimensions of the Scorecard method. ....................................................................................... 15
3.2.5 Qualitative dimensions of the Checklist method .......................................................................................... 22
3.3 VALUATION ANALYSIS. .................................................................................................................................... 27
3.3.1 Scorecard method. ....................................................................................................................................... 27
3.3.2 Checklist method. ........................................................................................................................................ 29
3.3.3 VC method ................................................................................................................................................... 30
3.3.4 Discount cash flow methods ........................................................................................................................ 32
3.4 COMPANY OVERALL VALUATION...................................................................................................................... 34
4 LEARNINGS AND RECOMMENDATIONS ..................................................................................... 39
4.1 CONCLUSIONS ON GROWTH PATTERNS ............................................................................................................. 39
4.2 CONCLUSIONS ON COMPANY VALUATION. ........................................................................................................ 40
ANNEX I SAMPLE OF EQUIDAM REPORT........................................................................................... 42
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Executive Summary:
The H2020 SME instrument is devoted to support high growth companies in their journey to market.
Although this support is expected to generate impact in growth and jobs, it is not always the case that this
impact emerges immediately after the project in KPIs just linked to company turnover and jobs.
This deliverable aims to capture these other KPI that can determine how the companies advance in
their route to market. The objective is to check how they are not only maturing as business but also to see
if they are already generating growth in terms of company value.
To look into these dimensions, the deliverable analyses in detail a subset of 26 Phase 2 SME instrument
beneficiaries using Equidam, a business valuation platform (https://www.equidam.com/). By using this
approach, this deliverable is able to identify the maturation of the different company dimensions thanks to
the SME instrument support. Furthermore, as Equidam uses five methodologies to calculate company
valuation, the deliverable also defines the fair value increase in the company valuation after the SME
instrument support.
At the sight of the results, it can be seen that growth in terms of company value is quite larger than the
one found directly on turnover or employment increase. The former has, on average, almost doubled
(93% increase) in the period analysed, while the latter, is quite in line with the control group set by EASME1
with SoE holders for their impact studies (turnover increase 20%, employment increase 17% vs turnover
increase 9% and employment increase 23% from the control group defined in the EASME dataset) .
Despite the limited size of the sample, these findings give very interesting insights into the real impact of
the H2020 SME instrument and show the relevance of its intervention logic to support companies to
reach their markets.
1
Figure 37 of the “Innovation kitchen. H2020 SME instrument impact report 2018 edition:
https://ec.europa.eu/easme/sites/easme-site/files/smei_2018_impact_report_final_may_2018.pdf
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1 Background
In the frame of the Access4SME project, the deliverable 4.1, named “Assessment study report: How does the
SME instrument beneficiaries’ businesses look like?” made a thorough analysis to identify key patterns in
SME instrument beneficiaries at proposal stage. It can be said that this deliverable 4.1 defined the most
valuable businesses that the H2020 SME Instrument was targeting to support.
This deliverable goes a step further analysing the real effect of the SMEI in the SME life, both in terms of
business maturity and growth (deliverable 4.2) but also in terms of company value (deliverable 4.3).
To capture both elements, the commercial platform Equidam (https://www.equidam.com/) has been used.
This platform has a thorough questionnaire to cover the business maturity part of the company and a strong
financial basis to cover the valuation part of the company. Among the different available possibilities for this
exercise, the consortium opted for Equidam for three main reasons:
 It includes five tested methodologies to obtain the fair value of a company.
 It aggregates more than 10 million updated points of comparable companies worldwide.
 It generates a valuable report for the company and offers an easy-to-use environment for us as
portfolio managers.
Equidam has been applied to each company in two moments of their life (pre-SME instrument project and
post-SME instrument project) obtaining a business maturity “snapshot” and a company valuation
“snapshot”. This deliverable presents the differences observed among these scenarios and moreover, which
is far more interesting, the changes occurring in the different company dimensions between both timeframes.
As the SME instrument aims to support “Highly innovative SMEs with a clear commercial ambition and a
potential for high growth and internationalisation” the idea of this deliverable is to quantify such high
growth potential and understand wider how the H2020 SME instrument is supporting them in maturing their
business for triggering such growth.
In order to be able to extract further learnings a control group has also been defined among companies with a
Seal of Excellence in Phase 2. To maximize coherence, this control group is based on the same one used by
EASME in their “H2020 SME instrument 2018 impact report”. 2
Considering that the access to the platform as portfolio managers has a monthly cost for the project, only
partners involved in this task have had access to Equidam during the period of collecting the cases. As such,
cases for the analysis have been collected from Spain (CDTI), Italy (APRE), Germany (DLR), Ireland (IE)
and Poland (IPPT-PAN).
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2 Methodology
As Equidam has been used for this task, the standard questionnaire from the tool has been used. This
questionnaire has 54 questions divided into 4 categories (team, business model, product and market and IP
and legal work) plus a financial part. The questionnaire has been done twice per company, with especial
focus on those fields with influence on the valuation calculations, as the questionnaire responses are the ones
that feed the platform to calculate a valuation per company. Equidam uses five methods to calculate such
valuation, which are:
 The Scorecard method, a method based on comparable operations
 The Checklist method, a method that value intangible assets
 The Venture capital method, that is based on EBITDA multiples
 Two discounted cash flow methods, with a different way to calculate the terminal value of the
company.
Equidam offers the company its valuation result according to these five methods and an aggregated value
based on the weighted average of these five methods according to the company status. In this way, this final
valuation considers differently the weight of each of the five calculation methods depending on the level of
maturity of the companies. For the companies without strong financial records, as its forecast is more
unreliable, the weight of the qualitative methods is higher.
The target size of the analysis was set to 25 beneficiaries. Once all the cases have been collected, CDTI and
APRE, as WP and Task leader, have performed the analysis of the data and agreed on the set of elements to
focus on.
2.1 Equidam questionnaire.

In order to analyse business maturity, the Equidam questionnaire is divided into four categories.
2.1.1 Team
Under this heading, 17 questions gather information around two different dimensions:
 Founders and management team number and commitment with the company (both in terms of effort
and cash)
 Founders and management team skills and experience in different dimensions (technical,
entrepreneurial, management, sales…)
The questions in this category are very relevant for the valuation methods that measure the team, either as
the “strength of the entrepreneurial and the team” in the Scorecard method or as the “quality of management
team” in the Checklist method.
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2.1.2 Business model
Under this heading, 11 questions gather information around two different dimensions:
 Company status in terms of development, from an internal but also from an external point of view
 Company status in terms of investment and investment attractiveness level
The questions from this category are very relevant for the final weighting of the valuation methods as it is
based on a correct assignment of the company status, either before entering the market (idea-development or
seed stage) or once entering it (pre-revenue-startup or expansion stages)
This company development stage is also relevant for the calculations of the valuation themselves as all the
methods take into account somehow this company status in their calculations.
2.1.3 Product and market
Under this heading, there are 17 questions dealing with the relevant elements of the company offer company
and the market they are targeting. These questions can be grouped around:
 Company location and specific industry
 Market size and competition
 Market barriers
 Rollout and commercialization strategies
The questions from this category are very relevant first to set country and industry of reference to get
relevant parameters such as market risk in DFC methods or industry multiple in the VC method. “Market
size and competition” and “rollout and commercialization strategies” questions are also relevant for the most
quantitative methods (checklist and scorecard methods)
2.1.4 IP and legal
Under the final heading, 8 final questions cover the IP and legal part of the company including elements as
company foundation date or IP protection status. These questions are taken into account especially in the
quantitative methods (checklist and scorecard methods).
2.2 Equidam financials.

A simplified financial fiche is needed to compute the financials part of the valuation that consists of a
simplified Profit and Loss table and a simple Balance Sheet, with the following fields:
Profit and loss table Last year* This year Year +1 Year +2 Year +n
Revenues* (yearly estimated revenues)
Cost of goods sold*
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Salaries
Other operating expenses
EBITDA (calculated)
Net profit (calculated)
Operating cash flow (calculated)
Long term investment
Debt at the end of the year
Fundraising plan (or grant entry)
Table 1: Profit and loss table
Assets (in Euros) Liabilities (in Euros)
Cash and equivalents Short term bank debt (<1 year)
Tangible assets Long term bank debt (>1 year)
Intangible assets Equity
Financial assets
Deferred tax assets
Table 2: Simple balance sheet (if there is no track record, report assets as acquisition costs)
While some financial elements of the Profit and Loss table are needed for valuation purposes, the balance
sheet is only for the completeness of the report, so they are not so critical for our exercise.
2.3 Equidam valuation methodologies.

Equidam uses five valuation methodologies, two of them using qualitative approaches and three of them
using financial approaches3. In the following headings, a rough explanation of them is presented just to
illustrate the rationale behind them.
2.3.1 Scorecard method.
The scorecard method was developed originally in 2001 combining the experience of several American
business angels and updated constantly until 2011 by a number of business angels’ networks across US.
3
Undestanding Equidam Business Valuation (2017)
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The method was developed to make objective decisions assessing young, unproven and usually pre-revenue
companies. It compares the targeted company with a similar company funded by an angel fund.
Equidam calculates this average pre-money valuation considering the stage of development, the region and
the business sectors and then calculated the valuation of the targeted company adding or reducing value
according to 7 factors, which are the strength of the entrepreneur and team, the size of the opportunity, the
product & technology, IP, competitive environment and marketing and sales partnerships.
2.3.2 Checklist method
The checklist method is also a widely accepted method for valuation of early-stage, pre-revenue companies
and it assumes a fixed maximum valuation for the company. After that, it assigns values to several aspects of
the companies. The model was created by Dave Berkus, long-time member of Tech Coast Angels.
In this case, the maximum pre-money valuation is set as 2,5M$ (2 M€ for EU companies) and the method
assigns a weight of 20% to each of the five dimensions it assesses: quality of management team, sound idea,
product rollout, strategic relationships and operating stage.
2.3.3 Venture Capital method
The venture capital method is one of the most adopted methodologies to estimate the value of innovative
companies for early stages companies. The basic principle of the method is to estimate the terminal value of
the company and its subsequent discount for a high annual return on investment. Typically this terminal
value is expressed in EBITDA multiples and the expected ROI is dependent on the company current stage.
2.3.4 Discounted cash flow methods
Several methods exist when it comes to assigning values to cash flows and the discount rate in a DCF
analysis. But while the calculations involved are complex, the purpose of DCF analysis is simply to estimate
the money an investor would receive from an investment, adjusted for the time value of money.
It is basically a financial methodology that needs to estimate future cash flow growth and a terminal value of
the company at the end of the analysis. Equidam calculates cash flow based on the financial information
requested in the questionnaire and compute terminal value of the company in two ways, resulting at the end
in the two different discounted cash flow methods of the platform:
 DCF with long term growth, assuming that the company will grow steady as a constant rate through
the analysis window.
 DCF with multiples, assuming that the company will have a terminal value based on an EBITDA
multiple, dependent on the industry.
Considering these five methodologies, the key parameters that influence the company valuation, are
summarized below, together with the likelihood that they had changed during the lifetime of the SME
instrument.
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Likelihood
Parameter considered Method
of change
Company maturity All including final weight High
Financial projections Venture Capital method and DCF methods High
Quality of management team-

Checklist method and Scorecard method Medium
strength of the entrepreneur and team
Strategic relationships - marketing/

Checklist method and Scorecard method High
sales/ partnerships
Product rollout - product/technology Checklist method and Scorecard method High
Sound of the idea Checklist method Low
Scorecard method, Venture capital method and

Business industry Low
DFC with multiples
Size of the opportunity Scorecard method Medium
Competitive environment Scorecard method Medium
Table 3: Key elements driving the change of valuation
2.4 Collection of cases.

A total of 26 cases have been collected from ES, IT, PL, DE and IE covering a wide set of companies
maturity and financial figures, being all of them SME instrument Phase 2 beneficiaries.
In order to analyze the effect of the grant, the companies have been assessed through Equidam in two
moments in time, one before the grant, (data based on 2015 information) based on the input provided by the
company in their proposal, one after the grant, based on the input provided by the company ad hoc during
2018, either under an interview format or under their own filling of the questionnaire. This methodology has
been selected to avoid the bias in the data inputs, especially regarding the maturity of the company and
furthermore, to see the evolution of the expectations.
The collection of the information has been distributed among partners of the task resulting in the following
country distribution:
Country Number of cases
Spain 9
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Italy 7
Ireland 5
Germany 2
Poland 3
Table 4: Country distribution of cases.

The collection of the information has been done under separate accounts under the Equidam platform, each
of them managed individually by each consortium partners. Once done the collection, an extraction from all
the accounts has been done directly by Equidam and provided to CDTI and APRE as task leaders for
analysis. All the management of this information has been done with the companies anonymized to
safeguard the privacy of the information.
As Equidam generates a report per case (attached in Annex I), this has been used as an extra element to
convince companies to participate in the study. As it can be observed, the report makes a summary of all the
dimensions of the company and gives them a valuation through the five methodologies with a final
recommended valuation (under an interval format).
From a company valuation point of view it can be set as a starting fair value performed objectively, and it is
really worth for companies aiming to get private funding after the end of their Phase 2 projects.
Regarding the control group, considering the limitations of making a cherry picking selection of the
companies, it has been opted to use the same control group used by DG RTD and EASME in their SME
instrument impact assessment 2018. This way, results are somehow complementary to those of this study
and furthermore, more efforts can be devoted to using Equidam as an extra service from the NPC network to
Phase 2 beneficiaries. In this respect, the growth patterns from this control group published in such report
are4:
 Turnover increase: 9%
 Employment: 23%
 Total assets increase: 26%

These values are taken as a basis when the comparison with the control groups is done along the results
section.
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3 Results
As this deliverable is the result of the merge of two tasks, namely task 4.2 “Impact assessment of the H2020
SME instrument in the beneficiaries’ actual growth and task 4.3 “Valorization analysis: has the H2020 SME
instrument beneficiaries’ boost company value?” this result heading is first characterizing the sample and
then, it is divided in two subheadings: growth analysis and valuation analysis.
The former will cover elements linked to different qualitative dimensions of company growth while the latter
will focus on the valuations themselves, not only on aggregated level but also on different intermediate
parameters worth to be discussed.
3.1 Sample characterization.

In terms of age, in around 30% of the cases, the SME was founded in 2015 or later, in 35% of the cases, it
was funded between 2011 and 2014, 21% in 2006-2010 and only in 15% of the cases, the company was
funded before 2005. This aligns quite well with the trends observed for the Phase 2 SME instrument
beneficiaries’ portfolio.
Furthermore, in terms of maturity, Equidam defines six potential stages in terms of company status:
 Idea stage: working on business plan and testing the initial problem-solution assumptions
 Development stage: working on the roll-out of the prototype and planning of operating phase
 Seed Stage: Prototype is ready and testing of its market appeal
 Pre-rev stage: already active but pre-revenues
 Startup stage: already active with revenues up to 200,000€
 Expansion stage: already active with revenues above 200,000€ and looking to scale up the
operations.
At the sight of the figure, it can be seen that the almost 40% of the cases start their SME instrument project
in the seed or pre-revenues stage (prototype ready and testing of its market appeal) and around 25% of them
start in the start-up stage (companies active with some revenues) in line with the required TRL6 of the
programme.
Similarly, it can be observed that the most frequent “ending stage of the project is the expansion stage (SME
aiming to scale operations) followed closely by the start-up stage, where the company is already starting to
get some revenues, although not always under a profitable mode.
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Figure 1: Maturity stage of the companies analysed (n=36)

In fact, at the starting stage, 53% of the companies declared that they had no revenues and this figure has
been reduced to 30.7% at the ending stage. Extrapolating this figure would mean that SME instrument
maturation process and support allows up to 60% of the pre-revenue companies to generate its first revenue
in the next 12 months after project ends.
Finally, and in order to show coherence with previous deliverables, the business model of the companies has
been analyzed, resulting again that in more than 90% of the cases, the SME sells under a B2B approach,
either alone (58%) or using a B2B2C approach (35%).
3.2 Growth analysis.

The logic of the SME instrument is to help the companies to mature in different dimensions of their business
but notably by design, it is focused on the product maturity (starting from a TRL 6 status) and in the business
model maturity (in terms of establishing distribution channels, performing road to market actions and
engaging with customers…).
These elements are taken into consideration in the Equidam questionnaire and show the following trends.
3.2.1 Product/service maturity
Figure below shows the current status of the product/service of the company. It can be observed that in most
of the cases, the company started either with a demo or a MPV already available for their clients (70%
together), and it ended basically with a product/service quite closer to market, highlighting that in almost
40% of the cases, it has even reached the market relatively soon after the project.
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Figure 2: Product/service rollout status of the companies analysed (n=36)
3.2.2 Business element maturity
In terms of business elements maturity, it can be discomposed in three elements:
 Knowledge of the demand and its size. In principle, any Phase 2 at proposal stage should
demonstrate that they know rather well their demand and potential clients, however, in many cases
this demand has not been tested in reality, typically because the product/services is not yet ready to
market. With this scenario in mind, the data collected shows that in post-project situation, the
demand has been tested and validated in almost 85% of the cases while in pre-project situation, the
demand was still to be tested by the SME in 50% of the cases.
 Partnership agreement for your business operations. Phase 2 proposals are requested to explain in the
proposal stage how they intend to work with their value chain and/or their key partnership that will
typically be developed in parallel to the rest of the business. According to the data collected, in post-
project situations, the strategic partnerships are already in place in 70% of the cases while this
element hardly reached the 30% in the pre-project situation.
 Distribution channels to reach the clients. Phase 2 proposals include preliminary information
regarding distribution channels to reach their clients, especially in those proposals where the SME
already has some presence abroad. In this case, in post-project situations, distribution channels seem
to be secured in around 40% of the cases, while this figure in pre-project situation is around 35%.
The real difference here is that while in half of the cases in pre-project situations these elements were
not even discussed, in post-project situations, this figure is reduced to less than 15% of the cases.
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3.2.3 Employment and turnover
In terms of employment, the cases analyzed declared a total employment of 493 FTE in pre-project scenarios
while 578 FTE in post-project scenarios, which would mean a net increase in employment of 17%. This
figure is rather similar to the one from the control group defined by EASME that sets this increase in 23%.
On the other hand, looking at declared current revenue in the moment of the analysis, it can be observed that
in average SME have increased their turnover in around 20% while in the EASME dataset, it was reported to
be just 9%.
These figures would suggest that the SME instrument beneficiaries do tend to behave as high growth
companies, but taking into account the short timeframe considered and the self-declaration nature of the
responses, they should be taken with caution. In order to see the wider picture of the whole company,
estimated company value is a better indicator that just FTE or turnover, and as such, it would be the
objective of the analysis in the next heading.
3.2.4 Qualitative dimensions of the Scorecard method.
As previously explained, this method was developed by business angels to make objective decisions when
assessing young, unproven and usually pre-revenue companies. The method compares the company with an
“average operation” company from the business angels’ portfolio, valued at 1 M€ and weight company
performance around several dimensions.
The exercise conducted has not only looked at the final valuation themselves but also to the increase or
decrease in the weighting of the different factors per company, due to the contribution of the SME
instrument in the different dimensions.
3.2.4.1 Strength of the entrepreneur and the team.
A business is nothing without the people who work behind it. While the entrepreneur may have big dreams,
it is ultimately the team, with whom he/she can achieve the different steps that lead to the goals.
Furthermore, since most startups deal with the challenge of limited resources and time, the team members
should be open to be multitasked, depending on the evolving company situation. It does not only require
specific competences and knowledge of the market, but also commitment, trust and managerial skills. In the
VC world, it is widely accepted that team members with relevant competences and a positive track record
will be more likely to build a successful company.
Equidam aims to capture a thorough picture of all these elements by looking at:
 The years of industry experience of the managers
 The managerial and business skills achieved by the managers academically and professionally
 The technical skills and capabilities achieved by the managers academically and professionally
 The level of managerial responsibility achieved in the past working experiences
 The team spirit and comradeship
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 The size of the staff
 The time and economic commitment by the founders and any other members of the staff
The figure below shows the performance in each of the cases with respect to this concept before and after the
project.
Figure 3: Change in the Scorecard method “strength of the team” component (n=26)
It can be seen that improvement of this factor occurs in all cases, while in average, it is around 15% increase,
starting on average of 52% in pre-project scenarios and on average 60.2% in post-project ones. Linking this
result with the one observed in the FTE, it can be concluded that although the strength of the teams is
somewhat reinforced thanks to the project, it is not a dimension where the project has had the highest impact
as in fact, in 30% of the cases, it has had no perceived change at all.
3.2.4.2 Size of the opportunity
Market size has a definitive influence on the value a company can reach in the market. By default,
companies operating in a large market, on average, will have higher probability to generate a high return on
investments in a shorter amount of time. However, the key point here is not only the market size but the
company real/potential capacity to serve such market. For that, a realistic assumption on the share of
potential customers is the right KPI as, at the end, it can be translated into expected revenue. Equidam aims
to capture this projection exercise by computing together:
 The estimated potential size of the market (if provided)
 The estimated revenues in the third year according to the stage of the development (if provided)
 The geographical scope of the business
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 The scalability of the business.

With that in mind, the figure below shows how the perception of the size of the opportunity change in the
company thanks to the SME instrument project.
Figure 4: Change in the Scorecard method “size of the opportunity” component (n=26)
In general terms, this change can be seen as moderate as in almost 50% of the cases its effect is negligible.
This translates in an average increase of hardly 13%. In this case, the average starting point is 46% and the
average ending point is 53%. These low values can also be explained because the “size of the market” is not
a compulsory field in the questionnaire and therefore it is empty in many of the questionnaires.
3.2.4.3 The intellectual property.
IP is one of the strongest ways to ensure an unfair advantage in a business and may help position the
company as a leader in the marketplace. Furthermore, with growth in business revenues, a proper IP strategy
is the key to protect the unique aspects of the business and foster innovations to explore new geographies,
either through licensing or joint ventures.
Taken into account the nature of the SME instrument programme, as observed also in the Deliverable 4.1,
most beneficiaries of the programme already had a strong IP protection in place that helps them to guarantee
a competitive advantage over their competitors. Therefore, in the subset analyzed occur similarly: the
starting point of the analysis shows that almost 40% of the cases already have a solid IP protection in place,
15% of them have their IP pending for approval and 34% declare that their know-how is “difficult to
duplicate”.
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Figure 5: Starting point on IP for the collected cases. (n=26)
With such a starting point in mind, the real incidence on this IP dimension thanks to the project is very
limited, with a slight increase of just 8%, starting from 61.2% to reach the 66% on average post-project.
Although there are some cases where the incidence is relevant, in around 60% of the cases the pre and post-
project scores remain the same.
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Figure 6: Change in the Scorecard method “IP” component (n=26)

3.2.4.4 Competitive environment
Company valuation is also dependent on the market forces of the industry it operates in and its level of
current/future competitors. Obviously, if such market is being shaped or it is following a deceleration trend,
it does have an influence in the SME valuation and scale up potential.
From a proposal perspective, successful Phase 2s will have done an adequate competitive analysis in their
proposals; however what Equidam aims to capture in the questionnaire is how far the product is unique and
different from the potential competitors (either direct or indirect, either incumbent or forthcoming). Using
SME responses, Equidam compute together:
 The analysis of the number of active market players
 The quality of competitive products/services
 The competitive advantage over competitive products/services
 The threat of international competition (if any)
The output of such analysis is shown in the figure below. As occurred with IP, the starting point of the
projects shows already an “advanced” scenario, with an average of 61%, and in the post-project scenario, it
increases up to 67%.
As this is not a real core element of the project, in 60% of the cases, there is no change in the perception of
the competitive landscape and SME are really confident on their unique selling points.
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Figure 7: Change in the Scorecard method “Competitive landscape” component (n=26)

3.2.4.5 Strategic relationship to reach the market
Figure 8: Change in the Scorecard method “Strategic relationship to reach the market” component (n=26)
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Getting a brand new product or services to the market is a great challenge for any SME and this is the real
focus of the support offered by the SME instrument. Strategic partnerships, especially for small companies
are the best way forward to access to new markets or customers, accelerate product development cycles and
even improve a company’s competitive positioning. Strategic partnerships may take the form of suppliers,
distribution channels or even first reference clients.
Equidam captures these elements considering:
 The partnership with vendors and other selling channels
 The partnership with strategic market agents to achieve the commercialization
As observed in the figure below, the impact of the SME instrument in this “access to market” readiness is
huge. It starts, on average at 45.5% in pre-projects scenarios while it ends up in post-project scenarios at
73%. Furthermore, in almost 40% of the cases, this feature in post project scenarios reaches above the 80%.
This means that readiness of the project in this dimension has increased around the 60% and it is one of the
drivers of company valuation increase, as we would observe later.
3.2.4.6 Stage of the Development of the Product/Service
Figure 9: Change in the Scorecard method “Stage of the development of the product/service” component (n=26)
A powerful product or a service is at the core of any business. Considering the logic of the SME instrument,
the entry point of all beneficiaries is TRL6, which means a product or a service at pre-commercialization
stage already tested in operational environment. Typically, activities within the project will allow SME to
finalise their product or service, prepare it for the market and test it in controlled but real scenarios.
Clearly, this is the second dimension where the SME instrument did have a strong impact on beneficiaries
and Equidam captures it only by computing the roll-out status of the product/service. In this respect, the
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figure shows again a huge impact on such dimension, with a starting point, in average of 39.2% and an end
point of around 66%, meaning a 70% increase in the readiness of the product to take it to the market.
3.2.5 Qualitative dimensions of the Checklist method
The checklist method is also a widely accepted method for valuation of early-stage, pre-revenue companies
and it assumes a fixed maximum valuation for the company, set in 2 M€ for European companies and 5
dimensions to assess:
 Quality of management team,
 Soundness of the idea,
 Product rollout and IP status,
 Strategic relationships
 Operating stage.
As done in the previous methodology, Equidam compute the responses to the different questions of the
questionnaire to each of these parameters to obtain a relative value.
3.2.5.1 Quality of the management team.
This concept is, by its nature, very similar to the one calculated for the Scorecard method, but for this case
Equidam computes eight different elements and weights them based on the full or partial commitment of the
team.
 The managerial and business skills achieved by the managers academically and professionally
 The technical skills and capabilities achieved by the managers academically and professionally
 The level of managerial responsibility achieved in the past working experiences
 The positive interaction of the previous features to the overall company success
 The team historical relationship (if any)
 The years of industry experience of the managers
 The average age of the founders: entrepreneurs of 35-45 are statically the most likely to succeed
 The presence in the team of serial, successful entrepreneurs.
In this sense, the evolution of such parameter can be seen in the figure below. In this case, the starting
average is 66% while the average post-project is 82% resulting on a 25% increase of the scores obtained
under this concept. As in this methodology this concept also covers entrepreneurial experience, it has clearly
increase the starting point for most companies compared to the Scorecard method, where this element is not
so present.
In any case, as commented before, increase of the quality of the team is not the prime objective of the SME
instrument support and it is not in the top three concepts that increase more in the timeframe analysed.
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Figure 10: Change in the checklist method “Quality of the management team” component (n=26)
3.2.5.2 Soundness of the idea
In the world of business, an idea is nothing without a proper implementation. Taken that for granted, to
ensure that a business idea can convert into a sustainable company a number of elements should be
guaranteed from a technical and economical point of view.
Somehow, all these elements are covered in this concept, ranging from the current market response to the
product-idea to the proper definition and characterization of the target market, together with its dynamics.
This way, Equidam computes here the following elements:
 How is the average trend of feedback received so far?
 Has the demand for the proposed product/service been tested?
 How would you define your target market?
 How would you define the level of competition in your targeted market?
 Has the size of the demand been tested?
 How high are the barriers to entry the market the company is targeting?
Considering all these elements, the status of the SME before and after the project can be seen in the
following figure. It can be observed that on average the starting point is close to 50% while the post project
scenario average is close to 61%. This means that on average, the increase of maturity of the business idea is
around 20%.
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Figure 11: Change in the checklist method “Soundness of the idea” component (n=26)
3.2.5.3 Product roll out and IP status
This methodology combines in just one element the product development cycle with the IP the company
owns to guarantee its competitive advantage, as Equidam computes to get this parameter the questionnaire
responses linked to:
 The presence of IP and the stage of the protections in place
 The type of IP protection applicable
 The positive interaction of the previous features to the overall company success
 The roll-out of the product/service.
Due to this combination, the starting point is close to 40% while its end point is close to 60%. As observed
also in the previous methodology, this maturation of the product does have a strong impact on the SME
evolution as it can be seen that this parameter, on average improves around the 50%.
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Figure 12: Change in the checklist method “Product rollout and IP status” component (n=26)
3.2.5.4 Strategic Relationships
Figure 13: Change in the checklist method “Strategic relationships” component (n=26)
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While the Scorecard method basically computes the strategic relationships linked to commercialization, the
Checklist method enlarges such strategic relationships to potential support the company may have with
respect to its business, technology, IP portfolio and considers:
 The presence of external investors among the shareholders
 The presence of the advisory board and their number
 The partnership with vendors and other selling channels
 The partnership with strategic market agents to achieve the commercialization
 The partnership with legal counsellors.
With this in mind, the evolution of this element is shown in the figure, starting from a rather low value at
pre-project stage (36%) and increasing to a relevant value in post-project situations (54.46%).
Having a 50% relative increase in this element is worth to mention as a consequence of the project itself but
also, in many cases, thanks to the structured support received by the business coaches of the SME
instrument.
3.2.5.5 Operating stage.
Figure 14: Change in the checklist method “Operating stage” component (n=26)
Despite this method is basically a quantitative methodology it aims to capture some basic parameters of the
profitability of the company to compute its valuation. As stated widely, metrics and realities are always
stronger than estimation and promises.
In this respect, this method directly incorporates into a weight the stage of development of the business
according two questions:
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 Which stage of development are you facing now?

 Is the company generating profits?
At the sight of the figure it can be observed that the impact is very relevant in this dimension as it started
from an average point of 30% and it reached to a post-project status of 55%. This means 80% of relative
increase in average under these elements.
3.3 Valuation analysis.

3.3.1 Scorecard method.
Taken into account the different variables explained in the previous section and the reference valuation for
the standard company of 1 M€, this valuation method offers a company valuation between 0 and 2 M€ (if all
the weights were at 100%).
Although this may not be fully appropriate for established companies, it can be a useful starting value for
pre-revenue companies.
Furthermore, as this methodology does not consider any financial element, the grant itself is not directly
computed into the valuation so that to establish a direct relationship between grant quantity and valuation
increase quantity do not apply.
Equidam gives by default a weight to each of these parameters, but can be edited by the user. Considering
the purpose of the exercise, the weight of these parameters is redefined as followed:
Scorecard method variable Weight
Strength of the entrepreneur and the team 30%
Size of the opportunity 20%
Intellectual Property 10%
Competitive environment 10%
Strategic relationships 15%
Stage of development 15%
Table 5: Scorecard method variables and weight.

The next figure shows how company valuation has increased according to the results of computing the
scorecard method for each company under these weights. In average terms, the company value has increased
in around 30%, having even cases where this value increase is above 50%.
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Figure 15: Scorecard method relative valuation increase (n=26)
Figure 16: Scorecard method absolute valuation increase (n=26).

Looking specifically into the actual valuation given through this methodology, the three following
conclusions can be observed:
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 Most of the beneficiaries, even in the pre-project situation are already above the average company
valuation defined in this methodology.
 Apart from three cases, where impact is limited, there are two main groups of companies; the first
one with valuation increases close to the 20% and the second one with valuation increases around the
40%.
 On top of them, there is also a third group of three companies with value increase above or close to
50%, mainly led by their increase of product maturity and strategic partnership agreements.
3.3.2 Checklist method.
As the Checklist method define its maximum valuation in 2 M€, the company valuation is defined by the
relative difference between this maximum number and the company situation, either at pre- project level or
post-project level.
As the five dimensions explained before are equally considered, each has a weight of 20% to contribute to
the company valuation. Similarly as before, as this methodology does not consider any financial element, the
grant itself is not directly computed into the valuation so the relevant KPI to look at is the relative value
creation for the company.
Figure 17: Checklist method relative valuation increase (n=26)
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Figure 18: Checklist method absolute valuation increase (n=26).

The two figures above show the checklist method company valuations, both in absolute terms and in relative
increase.
It can be highlighted that:
 all companies increase their value during the exercise, ranging from 10% to 85%
 The average relative increase of valuation of the sample is 43%.
 None of the companies reached the maximum score of the reference company even after the project.
In fact, only two companies were able to reach above 60% in post-project scenarios.
3.3.3 VC method
The venture capital method is a quick approach to the valuation of companies based on company financials.
It estimates the exit value of the company at the end of the forecast timeframe (three years) and ignores the
intermediate cash flows. The exit value is calculated by taking the EBITDA of the last projected year and
applying an industry-dependent multiple. This value is then discounted at a given rate to get the present
value.
Equidam computes the VC method based on specific information provided by the company (expected
revenues, COGS and other operating costs) and calculates this discount rate based on the stage of the
company and its expected revenue on year three as defined in the next table.
The logic of this variable discount rate is based on the potential uncertainty of such values depending on the
reliable or not track record of the company.
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Stage of development Revenue Y3 below 2.5M€ Revenue Y3 above 2.5 M€

Idea stage 126.79% 140.22%
Development stage 109.12% 126.79%
Seed stage 97.43% 105.33%
Pre-revenues stage 90.36% 97.43%
Startup stage 58.48% 71.87%
Expansion stage 43.09% 60.04%
Figure 19: Discount rate based on company stage and revenue 5)

As EBITDA is calculated as revenues minus COGS minus other operating expenses, it is not always positive
by default. In those negative cases, the resulting valuation would be negative and it has no sense. This has
occurred in 5 cases that have been eliminated from the comparisons done for this method.
Taken these 5 cases out, the average starting value of the remaining cases is 2.95 M€ while the average of
the post-project cases is 7.17 M€, which means on average a 142% relative increase of the company
valuation thanks to the project.
Figure 20: VC method absolute valuation increase (n=26, 21 with data).
5
Understanding Equidam Business valuation. (2017)
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Figure 21: VC method relative valuation increase (n=26, 21 with data).

Looking at the different valuation is worth to mentions the following observations:
 The industry multiplier has a strong effect in the absolute value of the valuations, as it is observed in
the sample that it ranges from 7.1 to 25.2. Although this figure does not affect the relative increases
of company valuations, which is the real logic of the exercise, it is relevant since the industry limits
are rather vague, especially in some sectors.
 Projected EBITDA at year three is the key parameter of this valuation and there is no way to
consolidate its “validity” objectively, despite the discount rate is introduced as a kind of “safety
factor”.
 For companies with EBITDA y3 below 1 M€, this method gives a comparable number to the
previous one. For companies with higher EBITDA y3, this method can give quite higher valuations.
3.3.4 Discount cash flow methods
The discount cash flow methods are purely financials methodologies to compute company value based on
projected cash flows. Equidam uses two different methodologies that just diverge in the way it calculates the
terminal value of the company (TV), which is the last part of the formula below.
Once calculated the cash flow present values, Equidam correct it by an illiquidity discount element, to
account for the fact that the sale of the equity stake is likely to happen on the private market and investors
would need a higher return.
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Where:
 Y1, Y2 and Y3 are the company cash flow in the respective year.
 SR is the survival rate of the companies in the country of the given year.
 DR is the discount rate, calculated internally by Equidam.
 ID is the illiquidity discount, that range between 25% to 40% 6 and is also computed case by case by
the tool.
Equidam uses two ways to calculate the Terminal Value (TV), one based on perpetual growth and the other
one based on industry multipliers, that lead to the Discount Cash Flow method with long term growth the
former (more common in the academics world) and to the Discount Cash Flow method with multiples the
latter (more common among industry professionals).
Figure 22: DCF methods relative valuation increase (n=26, 19 with data).
6
Damodaran, Aswath, Marketability and Value: Measuring the Illiquidity Discount (July 30, 2005). Available at SSRN:
https://ssrn.com/abstract=841484 or http://dx.doi.org/10.2139/ssrn.841484
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Figure 23: DCF methods absolute valuation increase (n=26, 19 with data).
Plotting together the change in the valuations from both methodologies, it can be observed that the average
increase between pre-project scenarios and post-project scenarios is very similar through both
methodologies, with increases of 115% (DFC with LTG) and 93% (DFC with multiples) despite the
elements to be considered are not directly linked between them (EBITDA vs available cash flow).
In this case, while EBITDA is just based on information inserted by the SME, the “available cash flow”
parameters needs some internal estimation from the system, which, in some cases, would lead to non-
realistic cash flow projections for the companies. This has resulted in a number of cases with negative
valuations, which have been taken out from the analysis, and some others that would need a deeper analysis
from a financial perspective, which is out of the scope of this report.
3.4 Company overall valuation.

Once Equidam calculates the five valuations under an independent process, the tool aggregates the five
values according to the weights assigned to each method, which are company-development- status
dependent.
Equidam sets as a default, the following weighting:
 Checklist method: 33%
 Scorecard method: 33%
 VC method: 11%
 DFC with LTG: 11%
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 DFC with multiples: 11%

However, in the case of companies self-declared as being in startup or expansion stages, which already can
show revenues and its financial forecast could be more reliable, the weight of the financial methods is
increased up to 16% each, decreasing the two quantitative methods to a 26% each.
With this approach in mind, the following tables show the summary of pre-project company valuation and
post-project company valuations. Cases with a negative valuation in any of the methodologies are kept out of
the table.
Pre-project
Case Scorecard Checklist VC DFC LTG DFC multiple
Valuation
1 Negative valuation at some point
2 1,02 0,86 1,17 2,71 3,39 1,43
3 1,15 1,08 0,38 1,42 0,91 1,05
5 0,95 0,65 12,65 21,15 35,98 8,21
6 1,11 0,85 12,31 18,65 33,13 7,71
7 1,22 1,25 6,16 4,89 9,84 3,98
8 0,93 0,98 0,31 0,74 0,39 0,73
10 1,12 1,07 1,50 3,16 2,73 1,75
11 1,02 0,89 0,03 0,08 0,05 0,52
13 0,95 0,84 12,11 13,47 16,45 7,19
14 1,17 0,88 0,49 0,42 0,72 0,79
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16 1,15 0,80 0,61 0,71 0,84 0,85
17 1,02 0,86 3,28 36,28 13,75 6,49
18 0,99 1,16 4,74 4,19 13,22 3,16
19 0,94 0,80 0,01 0,02 0,01 0,46
20 0,99 0,76 0,33 0,56 0,86 0,78
21 0,98 0,86 5,50 4,88 7,52 3,34
22 1,01 0,62 0,79 0,44 0,78 0,74
24 1,07 1,07 4,69 5,92 14,52 3,48
25 1,05 0,74 0,70 0,71 1,89 0,96
Table 6: Pre-project valuation: weighted value and absolute value per method. (M€)
Post-project
Case Scorecard Checklist VC DFC LTG DFC multiple
Valuation
1 1,27 1,26 17,09 2,74 22,49 7,43
2 1,29 1,28 3,67 8,53 8,12 3,92
3 1,45 1,41 1,00 2,26 1,66 1,53
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5 1,09 0,86 21,08 35,55 60,00 13,48
6 1,38 1,23 27,08 38,35 44,86 18,33
7 1,47 1,66 10,03 6,33 15,79 5,96
8 1,41 1,56 0,65 1,25 0,82 1,21
10 1,44 1,41 2,89 6,21 5,01 3,00
11 1,31 1,36 0,09 0,14 0,12 0,75
13 1,38 1,34 24,47 33,46 38,88 16,20
14 1,24 1,16 1,47 1,40 2,40 1,47
16 1,60 1,06 1,68 2,33 2,38 1,71
17 1,52 1,18 8,66 65,49 21,90 16,07
18 1,50 1,32 7,72 8,60 15,15 5,77
19 1,36 1,35 0,02 0,03 0,03 0,72
20 1,16 1,13 0,82 1,08 1,14 1,08
21 1,25 1,16 7,54 8,28 10,51 4,84
22 1,38 1,14 1,57 1,44 2,15 1,48
23 1,12 1,03 3,45 6,33 10,18 2,92
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24 1,33 1,51 5,78 9,32 17,76 4,57
25 1,26 1,13 1,09 1,55 2,87 1,41
Table 7: Post-project valuation: weighted value and absolute value per method. (M€)
Figure 24: Company valuation relative increase (n=26, 19 with data).

As observed in the tables, company valuation varies widely between methodologies since, at the end of the
day, each methodology “looks at” the company from a different angle. In any case, there are two typical
cases observed in the table:
 Companies with limited revenues /cash available, where the quantitative methods give a good
estimation of their value, and the contribution of the financial methods is limited.
 Companies with strong revenues /cash available, where the financial methods offer rather higher
valuations than the quantitative ones and the weight of the latter retains the valuation to increase.
From an absolute value perspective, the average company value at pre project stage is 2.8M€ while the
company average value at post-project stage is 5.45 M€. This means that during the timeframe analysed, the
company value has, on average, almost doubled (average increase of 93%).
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4 Learnings and recommendations

This deliverable has analysed 26 Phase 2 SME instrument beneficiaries using Equidam, which is a business
valuation commercial tool. This tool includes a thorough questionnaire of 54 questions divided into 4
categories (team, business model, product and market and IP and legal work) and a simplified P&L financial
table.
With the support of the members of this task, each company has filled in both the questionnaire and the
financial table within the Equidam platform. All this data, suitably anonymized, has been used as basis for
this deliverable.
Considering the limited size available, first task in the deliverable has been set to define the main sample
characteristics to define its representativeness of the overall SME instrument Phase 2 portfolio of companies,
at least in terms of starting age and maturity.
Data show that companies younger than 5 years represent around 30% of the sample and those older than 15
years are just the 15%. Similarly, it can be seen that almost 40% of the cases start from a seed or pre-
revenues stage (prototype ready and testing of its market appeal) and around 25% of them start in the start-
up stage (companies active with some revenues) in line with the required TRL6 of the programme.
Once representativeness is checked, the deliverable looks into the different company dimensions in terms of
growth analysis, covering product maturity, business element maturity, employment and turnover.
4.1 Conclusions on growth patterns

Under this angle, the following conclusions are worth to be highlighted:
 In 70% of the cases, the company started the project either with a demo or a MPV already available
for their clients and it ended with a product/service quite ready to market. Furthermore, in almost in
40% of the cases, it has even reach the market relatively soon after the project. These two elements
support the idea that the SME instrument not only allows company to prepare their product/services
to “disembark” the market but also it accelerates it strongly.
 In post-project situation, the demand is tested and validated in almost 85% of the cases, the strategic
partnerships were already in place in 70% of them and the distribution channels seems to be secured
in around 40%. Considering that in pre-project situation, the demand was still to be tested by the
SME in 50% of the cases, the strategic partnerships definition hardly reached the 30% and the
distribution channels were not even discussed in 50% of the cases, it can be concluded that the
H2020 SME instrument support has allowed the company to intensely mature also these other
business dimensions, which are not so obvious under a R&I typical action.
 Looking at classical KPIs of turnover and employment, the results found for the sample are quite
similar to those from the control group set by EASME with SoE Phase 2 holders for their impact
studies (turnover increase 20%, employment increase 17% vs turnover increase 9% and employment
increase 23% from the control group defined in the EASME dataset). This similarity suggests that
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these classical KPI only make sense in wider timeframes and moreover, that they do not fit 100% to
capture the elements the SME instrument aims to support.
As two of the company valuation methodologies, namely the Scorecard method and the Checklist method,
do compute qualitative elements of the company (compared either with an average company either with a
top-performing company) the observations on how these parameters change are worth to be discussed.
In the scorecard method, the following elements are discussed: strength of the entrepreneur and the team,
size of the opportunity, IP, stage of development of the product or the technology, competitive environment,
marketing /sales/ partnerships, while in the checklist method, the elements discussed are the next ones:
Quality of management team, sound idea, product rollout, strategic relationships and operating stage.
All these parameters are quantified in percentage terms during the study. Its comparison, on average values
in the pre and post project scenario is presented in the next table.
Parameter Pre-project average Post-project average
Scorecard method
Strength of the team 52.03% 60.21%
Size of the opportunity 46.83% 52.89%
Intellectual property 41.20% 46.39%
Stage of development 38.45% 67.69%
Competitive environment 61.08% 67.63%
Strategic relationship to reach the market 45.52% 73.56%
Checklist method
Management team 66.28% 82.60%
Sound idea 50.50% 60.92%
Project rollout 39.67% 59.57%
Strategic relationships 36.12% 54.46%
Operating stage 30.88% 55.05%
Table 8: Scorecard and Checklist parameter average values in pre and post project scenarios.
Looking at the values in the table it can be observed that, in the Scorecard method, the dimension that
relatively increase more during the lifetime of the project is the “stage of development” and the “strategic
relationships to reach the market” while in the Checklist method, it is the “operating stage” and the “project
rollout”, which more or less, aims to cover similar elements of the business.
4.2 Conclusions on company valuation.

Equidam calculates company valuation using five methodologies. The first two methodologies (Scorecard
and Checklist methods) have a capped maximum value of around 2 M€.
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Under the Scorecard method company valuation “starts” at 1M€ and increase or decrease based on a set of
parameters. In the sample analysed, the average pre-project valuation is 1.06M€ while the average post-
project is 1.35M€. This means that, in average terms, company value has relatively increased around 30%,
having even cases where this value increase is above 50%.
Similarly, under the checklist method, the company can reach a maximum valuation of 2 M€ depending on
its scores in the different parameters considered. In this case, the average pre-project valuation is found to be
0.89M€ while the average post-project is 1.25M€, which means a relative valuation increase of 41%.
In the other three methodologies, valuation is not capped and their estimation is based on financial
parameters.
In the VC method, based on EBITDA multiples, the pre-project average valuation is 2.95M€ while the
average of the post project cases is 7.17M€, which means on average a 142% relative increase of the
company valuation thanks to the project, while in the two DFC methods, it showed pre- project average
values of 6.3M€ and 8.2M€ and post-project average values of 12.1M€ and 13.2M€ for the “DFC with
LTG” and the “DFC with multiples” respectively, that leads to an average 115% and 93% relative increase
of company values.
These five methodologies assess company valuation from very different perspectives and are combined in
the last part of the process, to give companies a quantitative fair valuation. The weight of each of these
methodologies in the final valuation of the company depends on the stage of development of the company
and ranges from 10% to 34%.
After such combination, the average company value at pre project stage is 2.8M€ while the company average
value at post project stage is 5.45 M€. This means that during the timeframe analysed, the company value
has, on average, almost doubled (average increase of 93%).
Taken into account than the average grant received by these companies is 1.54M€, it could be concluded that
the impact of the grant in the company valuation is rather more than the direct effect of the cash flow of the
grant itself.
In this sense, it can be extrapolated that every 1 € of the programme given as grant to the company has
increased in around 1.75 € when considering the company valuation after the end of the project.
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Annex I: Sample of Equidam report

Growth and Valuation Analysis of SME Instrument.

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Growth and valuation analysis of

Due date of deliverable M28 (31.12.2018)

Actual submission date M32 (6.06.2019)

Start date of project 01.09.2016

Project duration 30 months

Work package WP4

Name of lead contractor for this deliverable APRE-CDTI

Author Luis Guerra-Antonio Carbone

Dissemination level (according to H2020) Public

EXECUTIVE SUMMARY: ............................................................................................................................ 4

2.1 Equidam questionnaire.

2.1.2 Business model

2.1.3 Product and market

2.1.4 IP and legal

2.2 Equidam financials.

Revenues* (yearly estimated revenues)

Cost of goods sold*

Other operating expenses

Net profit (calculated)

Operating cash flow (calculated)

Long term investment

Debt at the end of the year

Fundraising plan (or grant entry)

Table 1: Profit and loss table

Assets (in Euros) Liabilities (in Euros)

Cash and equivalents Short term bank debt (<1 year)

Tangible assets Long term bank debt (>1 year)

Intangible assets Equity

Deferred tax assets

2.3 Equidam valuation methodologies.

2.3.1 Scorecard method.

2.3.2 Checklist method

2.3.3 Venture Capital method

2.3.4 Discounted cash flow methods

Company maturity All including final weight High

Financial projections Venture Capital method and DCF methods High

Quality of management team-

Strategic relationships - marketing/

Product rollout - product/technology Checklist method and Scorecard method High

Sound of the idea Checklist method Low

Scorecard method, Venture capital method and

Size of the opportunity Scorecard method Medium

Competitive environment Scorecard method Medium

Table 3: Key elements driving the change of valuation

2.4 Collection of cases.

Country Number of cases

Table 4: Country distribution of cases.

 Total assets increase: 26%

3.1 Sample characterization.

 Seed Stage: Prototype is ready and testing of its market appeal

 Pre-rev stage: already active but pre-revenues

 Startup stage: already active with revenues up to 200,000€

Figure 1: Maturity stage of the companies analysed (n=36)

3.2 Growth analysis.

3.2.1 Product/service maturity

Figure 2: Product/service rollout status of the companies analysed (n=36)

3.2.2 Business element maturity

In terms of business elements maturity, it can be discomposed in three elements:

3.2.3 Employment and turnover

3.2.4 Qualitative dimensions of the Scorecard method.

 The years of industry experience of the managers

 The level of managerial responsibility achieved in the past working experiences