Understanding Startup Valuation: Upcoming FundingHero Event

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For startup founders, figuring out how much money to raise and what their business is worth can be really tough. But don't worry, FundingHero and Barclays Eagle Labs are teaming up to help you out. 

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We’re hosting an event called "Funding Unlocked: Ask & Valuation" on Thursday, June 6th, and it's all about giving you the knowledge and tools you need to get your fundraising Ask & Valuation right. 

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Why Startup Valuation Matters

Knowing how to value your startup is super important. And it’s closely linked to your ‘ask’. If you ask for too much money without context, investors might say no. But if you ask for too little, you might not have enough to grow your business properly. Plus, getting your valuation right can affect how much of your company you still own.

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"Ask & Valuation" is a vital aspect of  your fundraising strategy because it's about determining how much money a startup needs to raise and what the company is worth.

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Valuation significantly influences how investors view the opportunity. An inflated valuation may deter investors and run the risk of jeopardising your chances of raising. Thus, founders must align the valuation with investor expectations and market conditions..

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What to Consider: Founders

Valuing your company is something you'll think about a lot as a founder. It's crucial to tell a good story about it, especially when considering how much your business could be worth when you sell it. One way to do this is by using a financial model. This tool helps you estimate how much money your business will make and how profitable it will be in the next five years or so and what level of potential exit you may achieve.

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So, when investors ask how much your company is worth, having a solid financial model is vital to  give them a clear picture of your potential growth and profitability. It's like painting a picture of your company's future success for them to see and align their risk versus reward appetite to invest.

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When it comes to Ask & Valuation, founders should think about:

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• Fundraise Amount: Determine the right amount you need to hit your next key milestones without giving away too much ownership at your current stage.
• Valuation: Understand terms like pre-money and post-money valuation so you don’t indirectly mis-calculate your  dilution level for your round.
• % of Business Being Sold: Know exactly how much equity you're offering for investment.

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What Founders Should Consider

As a founder you need to understand what types of things investors consider when assessing valuation There are lots of factors but  three key ones are: what signs of strong traction have you achieved to date, how much can your business grow given the size of your market, and most importantly, the strength of your team. Team is always a critical component as they want to know if your team has what it takes to make your business successful. Investors understand that your business might change its plans along the way, but if they believe in your team and the market is big enough to support big profits and an exciting exit, they'll still want to invest.

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Founders should think about:

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• Valuation Method: How have you arrived at the valuation.
• Valuation Factors: Evaluate key aspects like the founding team, traction, and market potential.
• Cap-Table Planning: Assess what the shareholdings look like now and how they may change in the future with additional funding rounds
• Potential Return: Determine the potential return multiple based on the valuation entered in at and the level growth prospects.

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Why Startups Struggle with Determining Their  Ask & Valuation

Did you know that almost all startups fail to raise enough money? That's because many founders aren't ready for the fundraising process. They might not understand what investors want or how to explain why their business is worth investing in.

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Startups often find it tough to put a value on their business for a few reasons:

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Limited Track Record: Startups are new and don't have a long history of making money or showing consistent growth. This makes it hard for investors to gauge how much the business is really worth. 

Uncertain Future: Because startups are still in the early stages, there's a lot of uncertainty about how successful they'll be in the future. This makes it tricky to predict their future earnings and profitability, which are important factors in valuation.

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Subjectivity: Valuing a startup is more of an art than a science. There are no set rules or formulas to follow, despite there being several different methods being created over the years. So it often comes down to judgement calls based on factors like the team, the market, and the potential for growth, so ultimately it comes down to the level the market deems acceptable

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Lack of Comparable Data: Unlike established companies, there may not be many similar startups to compare to when determining valuation. This lack of comparable data can make it hard to justify a specific valuation to investors.

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Here’s an event breakdown:

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• Networking & Drinks: Meet other founders and have a chat.
• Welcome & Introduction: Get started with Joanna Birch, who knows a lot about innovation and business.
• Creating More High Growth Businesses: Learn about how to make your startup grow faster.
• Founder Pitches: Hear from other founders about their experiences.
• Ask & Valuation: Founders Perspective: Find out how other founders decide how much money to raise.
• Break: Take a breather and grab a snack.
• Ask & Valuation: Investors Perspective: Learn from investors about what they look for in startups.
• Closing Remarks: Wrap up the event.
• More Networking & Drinks: Hang out and chat some more.

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What to expect: 

By joining "Funding Unlocked: Ask & Valuation," you'll be setting yourself up for success in future fundraising rounds. You will gain:

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Expert Advice: Get tips from people who've been there and done it before.

Meet Like-minded People: Connect with other founders and maybe even investors.

Practical Tips: Learn things you can actually use to make your fundraising better.

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How to reserve a seat at this event: 

You can reserve your seat using our Eventbrite page, and it’s as simple as entering your email and a few details to book your spot. 

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Sign up to the event here. 

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Ask & Valuation Event Itinerary 

Date and Time:

Thursday, June 6 · 5:30 - 8:30 PM GMT+1

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Location:

STEAMhouse, Belmont Row, Birmingham B4 7RQ

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About FundingHero:

FundingHero helps founders learn how to get investment and grow their businesses faster. Check out their website to learn more.

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About Barclays Eagle Labs:

Barclays Eagle Labs is here to help UK founders from start to finish. They've got the resources and support you need.

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Special Thanks:

Thanks to The British Business Bank and BCU STEAMhouse for helping make this event possible. They're all about helping businesses like yours thrive.

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