How Performance-Based Valuations Work

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In startup funding, the valuation is often fixed and does not change.

Performance-based valuation changes the valuation if certain conditions are not met.

Here’s how performance-based valuations work:

Let’s take an example.

The startup proposes a valuation of $10M and forecasts revenue to reach $1M by the end of the year.

The investor agrees to a $10M valuation.

If the startup does not achieve the revenue forecast, then the investor claws back some of the equity.

In the example, if the revenue falls short, then the valuation goes from $10M to $8M.

The startup must achieve certain performance requirements to maintain the valuation.

This provides an incentive to the founder to achieve the milestone promised to the investor.

This compensates the investor in the event the milestone is not achieved.

Consider a performance-based valuation for your fundraise.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Roadmap for Medical Device Startups

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

The path for a medical device startup is clearly defined.

In building a medical device startup or diligencing one, consider this roadmap.

Market requirements -- establish the current state of the market, including size, needs, and current solutions.

Product requirements -- define the requirements a medical device product must have to be successful with customers.

Clinical unit -- a prototype that is used to run initial clinical tests.

Preclinical validation -- initial test results with the clinical unit.

First in human test -- clinical trials with human subjects.

Clinical validation -- in human clinical test results.

CE Mark -- regulatory approval to sell a product in Europe.

First European orders -- initial sales of the product in Europe

510 K clearance -- regulatory approval to sell the clinical device in the US.

First US orders -- initial sales of the product in the US.

Break even -- sales equal operating costs.

Growth then scale -- sales continue to grow.

In reviewing a medical device startup, it’s important to know the steps ahead and plan your fundraising for it.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.

Building the Competition Slide

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

The startup pitch deck should contain a competition slide.

Some founders start the pitch with, ‘we have no competition’.

Avoid this, as investors will interpret this as if there is no market.

The purpose of the competition slide is to show your competitive advantage.

What do you have that others don’t have?

It’s important to know your market and the players within it.

It’s also key to know what customers value -- price, performance, other?

Here are the steps in building the competition slide:

List out the direct competitors -- those who compete with you head-on.

List out the indirect competitors -- other options the customer has, such as doing nothing.

Show your market positioning -- where do you stand relative to others.

Call out your differentiation -- how you are unique.

Show potential competition that may arise.

Show the product from the customer’s point of view.

If possible, define your competitive advantage with numbers.

For example, our product reduces cost by 3X.

Use these steps to build your competition slide.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.