Valuations & Exits by Philipp Muellauer

I joined the peer-led 2019/2020 Startup Leadership Program in London. Each fellow actively participates in the learning experience and I’ve chosen to run the session on “Valuations and Exits”.

As a class CEO, you can tailor and structure the class to best fit the needs of your cohort. Your cohort will have a wide range of backgrounds and each founder will be at a different point of their startup journey. To run a successful class, I recommend sending out a pre-class survey to assess the objectives of the fellows and to try to cover them to the greatest extent possible. Key questions include:

  • Have you been through a valuation?

  • Do you already know how to value your company?

  • Would you like to apply a valuation method in the form of an exercise or workshop?

  • How relevant are exit strategies to you right now?

  • Do you have suggestions or topics that you’re particularly interested in?

  • What questions would you like to ask a VC or fellow founder?

Based on the survey results, my cohort was predominantly early stage (pre-seed round) so valuation in the context of fundraising (rather than exits) was the most relevant topic. Further, I was able to identify who in the cohort had been through a valuation and was able to speak to them about their experience.

I structured the valuation class around a typical founder’s journey, splitting the time between a seminar and a panel discussion.

During the seminar, I covered topics such as:

  • Why is valuation important? Why does it matter?

  • At which points in their journey does a founder need to value their company?

  • What factors will raise or lower your valuation?

  • What can a founder do to increase their valuation (e.g., Negotiation, SEIS)?

  • How does dilution work and what are the implications around control?

  • Valuation methodologies applicable to early-stage companies

The panel consisted of 4 entrepreneurs. Previous classes frequently had VCs and investors as guests, so this session was focused on the founders and gave them a chance to share their (positive and negative) experiences around valuation and fundraising.

Lessons Learned & Notes to The Next Class CEO

  • Arrive early to sort out any technology hiccups, arrange the chairs, and set out some tables with water for your panel.

  • Make use of a pre-class survey to identify who in your cohort has been through a valuation.

  • Set up phone interviews with founders who had been through valuations to prepare for the class. Get some stories. Get some anecdotes. Find out what mattered.

  • De-emphasise financial theories. Most standard models are not relevant or applicable to early-stage companies and you will exclude SLP fellows without a finance background. No investor ever sat down with a founder and poured over a spreadsheet to value their company.

  • Limit your panel to a maximum of 4 speakers (3 would be preferable).

  • Ask one of the fellows in the class to be on standby in case a panellist drops out.

  • Invite your speakers and fellows to the pub after the session. This can make everyone’s evening more enjoyable.

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