Xavier Corman | Martin van Wunnik 1 07/02/2012 Xavier Corman | Martin van Wunnik 1 07/02/2012

Finance for Startups

Martin van WunnikXavier Corman

Xavier Corman | Martin van Wunnik 2 07/02/2012 Xavier Corman | Martin van Wunnik 2 07/02/2012

Sponsors

Xavier Corman | Martin van Wunnik 3 07/02/2012 Xavier Corman | Martin van Wunnik 3 07/02/2012

Finance for Startups

• Introduction

• Company Setup• Accounting• Financial Plan• Funding your startup• Valuation / Dilution

• Workshop’s details• Q&A• Pizza

Xavier Corman | Martin van Wunnik 4 07/02/2012 Xavier Corman | Martin van Wunnik 4 07/02/2012

Who we are ?

Martin van Wunnik

Xavier Corman

Xavier Corman | Martin van Wunnik 5 07/02/2012 Xavier Corman | Martin van Wunnik 5 07/02/2012

This presentation is available for free:

http://www.meetup.com/Finance-for-Startupshttp://www.slideshare.net/xaviercorman

Xavier Corman | Martin van Wunnik 6 07/02/2012 Xavier Corman | Martin van Wunnik 6 07/02/2012

Creativity level

Finance & Accountinglevel

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Creativity level

Finance & Accountinglevel

Reality check

Funding Value ?

Investments, Costs, Revenues, Cash

Financial Plan & Elevator pitch

Organization/CompanyTeam/Partners

Xavier Corman | Martin van Wunnik 8 07/02/2012 Xavier Corman | Martin van Wunnik 8 07/02/2012

Creativity level

Finance & Accountinglevel

1.000 EUR

21% VAT(quarterly or monthly refund

request/compensation)

Investments

Cash out: 1.210 EURCash in: 210 EUR (>3m)

Profit impact: 200 EUR over 5y

Cost

Cash out: 1.210 EURCash in: 210 EUR (>3m)Profit impact: 1.000 EUR

Discounted Cash Flows

Xavier Corman | Martin van Wunnik 9 07/02/2012 Xavier Corman | Martin van Wunnik 9 07/02/2012

Why Finance for Startups ?

If you don't think about the future,you cannot have one.

John Golsworthy

where you want to go

how you are supposed to go

You need to know

Xavier Corman | Martin van Wunnik 10 07/02/2012 Xavier Corman | Martin van Wunnik 10 07/02/2012

Buy productPay product Sell product Waiting

paymentGet payment

CASH

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» Why should I ?

» Capital

» Hats/Personalities

Company Setup

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Why should I ?

Limit your liabilities !Professional touch

Fiscal 34% (24% for 3y)Succession

...

Formalities & some costs (bank, notary, KBO/CBE, social secretary)

Double entry accountingRevisor for in-natura contributions

Xavier Corman | Martin van Wunnik 13 07/02/2012 Xavier Corman | Martin van Wunnik 13 07/02/2012 13

Minimum capital

REAL minimum = Business required !

Legal

BVBA-SPRL (min.1)CVBA-SCRL (flexible)

18.550 EUR 6.200 EUR(or 12.400 EUR)

SA-NV (min.2):

61.500 EUR

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Shareholders Control (>51%)

Absolute / Relative majority40% - 60%

40% - 10% - 10% -10% -10% -10% -10%

Voting RightsClass A & B

Minority (blocking) interest

Investors per phase (dilution)!

Stock options:fiscal implications, buyer required

vesting conditions : targets, period (4y)

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Hats/PersonalitiesFounders – Shareholders

(Board)

Owners

CEO (gérant/zaakvoerder)

General Manager

Directors

CxO

Employees

Founders:3 years responsibility

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Accounting: notions

• Balance Sheet – Bilan – Balans

• Profit & Loss – Compte de résultat – Winst-en Verliesrekening

• Cash-flow – Trésorerie – Schatkist

• Financial Plan – Plan financier – Financieel Plan

Xavier Corman | Martin van Wunnik 17 07/02/2012 Xavier Corman | Martin van Wunnik 17 07/02/2012

Accounting: Balance Sheet

Non Current Assets(Actifs Immobilisés/

Vast Activa)

Equity (Capital/Kapitaal)

LT Debts

ST Debts

Current Assets (Actifs circulants/Vlottend Activa)

ACTIVE PASSIVE

Xavier Corman | Martin van Wunnik 18 07/02/2012 Xavier Corman | Martin van Wunnik 18 07/02/2012

Accounting: Profit & Loss (P&L)

Revenues (Sales…)

COGS (Cost of Sales)

General Expenditures

Personnel Costs

Depreciation

Financial cost

Profit

Gro

ss m

argi

n

EBIT

DA

Adde

d Va

lue

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Financial Plan

Content– Assumptions– Profit & Loss– Balance Sheet / Investment– Cash-Flow -> Cash needed

– Valuation of the project– Profitability / return of the project

Xavier Corman | Martin van Wunnik 20 07/02/2012 Xavier Corman | Martin van Wunnik 20 07/02/2012

Financial Plan in 10 min

• Don’t waste your time in developing a huge financial plan before to be sure that your project is viable !

• In many case, in less than 10 minutes, you can see if your idea worst something.

• How to make a very quick financial plan ?

Xavier Corman | Martin van Wunnik 21 07/02/2012 Xavier Corman | Martin van Wunnik 21 07/02/2012

Financial Plan in 10 min /questions

What are your revenues ?

What are your costs ?

What are your investments ?

How many persons for your project ?

Xavier Corman | Martin van Wunnik 22 07/02/2012 Xavier Corman | Martin van Wunnik 22 07/02/2012

Financial Plan / Prerequisites & Assumptions

• Financial plan for 3 to 5 years• Monthly or Quarterly base

• Excel or Calc is your friend

• Start by listing your main assumptions

Xavier Corman | Martin van Wunnik 23 07/02/2012 Xavier Corman | Martin van Wunnik 23 07/02/2012

Financial Plan / Tips for assumptions

• Office: 25 m²/person• Price of offices: EUR 100/m²/year + 15 % for

maintenance• Insurances: 1 % of revenues• Marketing: define a % of revenues + starting

investment• Don’t forget lawyers, accountant, social

secretary, office supplies…

Xavier Corman | Martin van Wunnik 24 07/02/2012 Xavier Corman | Martin van Wunnik 24 07/02/2012

Financial Plan / Profit & LossRevenues (Sales…)

COGS (Cost of Sales)

General Expenditures

Personnel Costs

Depreciation

Financial cost

Profit

COSTS

CASH-FLOW IF NEGATIVECASH

DRAIN

Xavier Corman | Martin van Wunnik 25 07/02/2012 Xavier Corman | Martin van Wunnik 25 07/02/2012

Financial Plan / Investments

List all your scheduled investments

YEAR 1

YEAR 2

YEAR 4

YEAR 3

YEAR 5

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Required Cash-Flow

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Funding

Some remarks

Principles

Options

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And entrepreneurs? They seem to have confused the definition of entrepreneurship altogether.

Entrepreneurship, they mistakenly believe, equals financing!

This is wrong.

Over 99% of entrepreneurs who seek funding get rejected.

Yet, the entire world is focused on the 1% that is "fundable."

http://www.readwriteweb.com/start/2012/01/the-other-99-of-entrepreneurs.php

Funding, ‘Financing’

Xavier Corman | Martin van Wunnik 29 07/02/2012 Xavier Corman | Martin van Wunnik 29 07/02/2012

http://www.ideaowl.com/blog/2011/06/microconf-2011-3-surprises-and-learnings-from-best-conference-ever/

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Interest – Returns

100 102 Bank100 0..1000 Stock market

100 100 F.F.F.100 107 Bank100 130 BA / VC

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100+7=107 Bank

Principal & Interest

Able to pay back over time

Guarantees

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How to finance your start-up ?

EquityLT DebtsST Debts

FFF

B A

V C

Crowd

Public

Banks

Shareholders

Clients

Suppliers

Banks

Shareholders

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Xavier Corman | Martin van Wunnik 34 07/02/2012 Xavier Corman | Martin van Wunnik 34 07/02/2012

Valuation

• The value of any business is the present value of the future income stream

• You sell future virtual profits for present real money

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Valuation

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Sweat Money

Exit Money

Catch-up Te

chniques

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Valuation - What is dilution ?

Start 1st Round 2nd Round0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

85%68%

51%

15%

12%

9%

20%

15%

0.25

VC 2VC 1BAFounder(s)

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Next Workshops• Company Setup06/03/2012 | 18:30 – 20:30

• Accounting20/03/2012 | 18:30 – 20:30

• Financial Plan17/04/2012 | 18:30 – 20:30

• Funding15/05/2012 |18:30 – 20:30

• Valuation29/05/2012 |18:30 – 20:30

Venues still to be defined (Brussels)

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Each workshop = 90 EUR vat incl.

WeStartup members: 50 EUR (VAT incl.)

2 hours + Slides + Foods & Drinks

There is no free-lunch*

* Milton Friedman

MAX 10 pers/workshop

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Questions & Answers

Free download:http://www.slideshare.net/xavierCorman

http://www.meetup.com/Finance-for-Startups/messages/boards/