When determining the pre-money value of a company (for series B), should the forecasted financial statements include the potential achieved with the capital that will be invested?

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Yes

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If you see a definite correlation between the capital injected and growth from bootstrap to angel and Angel to series A, yes (depending on whether the startup is bootstrapped or not)

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In that case, have a two pronged scenario ready. Mention two cases.

Case 1 - EBIT not achieved
Case 2 - EBIT achieved

That way, you won’t be blindsided if your higher ups inquire about your analysis.

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Yes

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Yes and no: this would give you post-money. Then you need to adjust for ore-money.

Here’s how I’d do it (assuming no dividends throughout and no significant cash balance at the sale in 5 years).

Start with the valuation 5 years in the future with the multiple, based on statements with both fund raising rounds.
Discount that to 3 years in the future. That’s post-money in 3 years. Deduct the size of the round in 3 years. That’s pre-money in 3 years.

Then repeat: discount to today to get post-money for this round, and deduct the size of this round to get to pre-money.

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Thanks for the insight! Which discount rate would you use? Or how to determine the rate, since future cash flow would depend on the % owned based on the pre-money which is undetermined.

If you add potential with the capital that will be invested that makes it post-money.
I’d do it as scenario

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Yes you calculate that as the post money valuation as a possible scenario.
The pre-money valuation is to help you figure out how much to buy in at. If you add all the potential, what is your upside?

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