Description
As software company founder, you are presenting your venture’s financing round to an investor, who is a partner at a VC fund. According to your team, you have 100 users this year (year 1) with each paying $150 for your software annually.
Your CFO says your annual expenses are around $250k annually and projected to rise 10% each year (year on year increase). Good news is, your sales (units of annual software licenses) will grow by 20% in year 2, and 30% on year 3 and by 40% in year 4 (year on year throughout). More importantly, in year 3 and 4, you are improving the product and can charge customers $200 a year.
Assuming 4-year projection time-horizon, what is:
Your gross burn (in $) for each of the 4 years (6 points)
Your profit margin (in $ and %) for each of the 4 years (6 points)
Assuming your industry average P/E ratio or multiplier, what is your terminal value ($) for year 4 as an exit valuation? (8 points)
To get full points, include a short (<1 page, double-spaced, 12 pt Times New Roman in .DOC or .PDF format) write up of your rationale for the 3 answers above, as well as an excel sheet (.XLSX format) of your analyses with formulas.
