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By Buddy-Watcher Team

Buddy-Watcher shines a light on the process of the valuation of the company

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Public

Dear companists,

Over the last few weeks, queries have been mounting up about our company valuation on companisto. Seeing as we don’t want to just brush this topic under the carpet, we have decided to disclose our valuation to you in order to establish some transparency.

For the valuation, we make use of equidam, a platform, which specializes in start-up valuation for fundraising campaigns and which we would like to take this opportunity to thank for their cooperation. The platform has already been used by over 15,000 companies in order to acquire a sound evaluation.

By disclosing the process, we hope to make the valuation process comprehensible for you. This should make it easier for you to form an informed opinion and, where appropriate, to target certain points of the valuation and to make critical enquiries thereupon.

 

The equidam valuation for Free-Linked GmbH shows the following.

Overview to the Buddy-Watcher valuation

As presented above, equidam uses five different methods in order to determine the value of the company. These are the scorecard method, the checklist method, the venture capital method, discounted cash flow with long term growth, and discounted cash flow with multiples. Detailed information on the individual procedures can be found here.

For Free-Linked GmbH, these methods result in an average pre-money evaluation, that is, a valuation of the company before the round of financing via companisto, of € 4,401,434.

 

The scorecard method was developed between 2001 and 2011 by business angels in the USA. It compares the company with similar companies and adds or subtracts from the value of the company, depending on the performance of the company under various criteria. The process carries a 21% weighting. The equidam evaluation for Free-Linked GmbH shows the following.

 

The Scorecard Method

 

The above bar chart shows how Free-Linked GmbH compares to other companies in the sports industry, with respect to various different criteria. These percentages are listed separately in the lower area of the graphic. Using the start value of the method, which lies at EUR 1,066,571 results in a valuation of € 1,426,539.

 

The check list method was developed by Dave Berkus, one of the most active business angels in the USA. This attributes certain values to various functions of the company, which are then added. The process carries a 20% weighting. The equidam valuation for Free-Linked GmbH shows the following:

 

The Checklist Method

 

The presentation of the results is similar to that of the scorecard method. The upper area of the bar chart shows how Free-Linked GmbH scores against an average company in the sports industry. The criteria for the valuation differ from those of the previous method. On the basis of the percentages and a maximum value of 2,000,000 EUR, it results in a valuation of € 1,368,000.

 

The Venture Capital Method is one of the most commonly used methods in the ealuation of innovative companies in their early stages. The exit value of the start-up is determined to the end of the forecast period. The process carries a 20% weighting. The equidam valuation for Free-Linked GmbH shows the following:

 

The Venture Capital Method

 

The Free-Linked GmbH cash flow can be read from the bars for the next three years. The forecast EBITDA from Year 5 is used however in the final evaluation. This is multiplied with the industry multiplier of 8.7 in order to ascertain the exit value in Year 5. This value is discounted at a rate of 60.04% to ascertain the cash value. This results in a pre-money evaluation of € 33,620,403.

 

The Discounted Cash Flow with long term growth requires that the company survives with a regular and constant rate of growth. The applied rate of growth is based on the relevant industry. The process carries a 20% weighting. The equidam valuation for Free-Linked GmbH shows the following:

 

Venture Capital Methode - DCF with Long Term Growth

 

The cash flows are weighted in the upper part of the graphic with regard to their failure rate and are then discounted using a discount rate. This takes into account various sector-specific risks and uncertainties. The adopted long-term business growth is also determined from the industry affiliation concerned. Finally, the value of the company is discounted via an illiquidity discount. This is due to the fact that the sale of the shares is likely to be outside the stock exchange and rather on the private market. Therefore, investors require a higher return potential in a start-up investment. This results in a pre-money valuation of € 7,047,057.

 

The Discounted Cash Flow with multiples is based on the assumption that the exit value of the start-up is determined by the average value in comparison with other companies in the industry. The process carries a 19% weighting. The equidam valuation for Buddy-Watcher shows the following:

 

Venture Capital Methode - DCF with Multiples 

 

The procedure provides a mix of the two previous methods. The cash flows are also weighted and discounted and charged with an industry multiplier. Finally, an illiquidity discount is applied. This results in a pre-money evaluation of 38,919,838.

After identification and weighting of all the values, a company value of € 4,401,434 is resulted in for Free-Linked GmbH. Because, in the evaluation, we assume a best-case scenario, we have, in coordination with the companisto, lowered the real value and determined it to be EURO 3.25 million.

Through the use of equidam, it was possible for us to value our company by means of an independent and professional institution. The evaluation made use of about 10,000,000 data points of comparable companies. By means of the predefined processes and algorithms, the valuation is largely relieved of subjective impressions and can be objectively argued.

By making this disclosure of the valuation, we hope to have provided some transparency and thus also a certain degree of acceptance of the procedure. We are happy to discuss  any further, and even critical,m questions. The complete evaluation can be read here.

 

Kind regards,

Your Buddy-Watcher team



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NOTE:

Investments in crowdfunding projects offer great opportunities, but they are risk investments. In the worst case, the entire investment amount may be lost. Consequently, these investments are unsuitable for retirement plans. However, there is no obligation to make further contributions. Investors can minimize their risk by splitting their investment amount between crowdfunding campaigns rather than investing all of it in one crowdfunding campaign. Professional investors often follow this strategy because it causes the risk to be distributed among several investments. In this way, successful investments can balance other less successful investments.

The shares of the Companists are subordinated profit-participating loans (partiarische Nachrangdarlehen). Such loans are shares in a business with similar characteristics as equity. If the company becomes insolvent or is liquidated, the claims of the Companists – just like those of all other shareholders of the company – will be satisfied from the assets in the insolvency or the assets in liquidation only after the claims of all other external creditors have been satisfied. Thus, Companists are treated like any other shareholder of the company during insolvency or liquidation proceedings.

The company information published on the Companisto website is provided solely by the companies. The projections made by the companies do not guarantee successful development of the company in the future. Consequently, crowdfunding investments are suitable only for those investors who can cope with the risk of a total loss of the capital invested. Investors make their own independent investment decisions and bear all risks themselves.

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438

Companists

170,350 €

Invested

8.45 %

Share offered

Contact Details
Free-Linked GmbH
Blücherstr. 32
75177 Pforzheim
Germany

Email: investor-relations@buddy-watcher.de
Website: www.buddy-watcher.com
Please note
The acquisition of this asset involves considerable risks and can lead to the complete loss of the assets used.

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