Equidam, the online platform for startup valuation, is partnering with ProjectionHub, which helps entrepreneurs create financial projections through software, templates, and consulting services.

Financial projections are an integral part of startup valuation, and their solidity contributes to the overall confidence in the valuation and the deals that follow. This partnership with ProjectionHub enhances both offerings, allowing founders to seek further guidance on financial projections from a tailor-made resource which integrates directly with the Equidam platform.

“ProjectionHub shares our philosophy of aiding founders with software as much as possible, increasing efficiency and lowering the cost entry barrier. We’re delighted to partner with them and are sure that their templates will help many founders make more solid projections, valuations and close fairer deals.”

– Daniel Faloppa, Founder of Equidam

The ProjectionHub team has worked on startup projections for the better part of a decade. From their experience, they offer tailored advice and a library of 50+ financial projection templates to facilitate your own financial modelling. The templates are Excel based, and each comes with up to 5 year profit and loss, balance sheet, and a cash flow projection along with a number of graphs and tables to visualize your projections. Each template is complete with an Equidam tab to ensure your information is formatted for easy input into the Equidam platform.

“The Equidam software and the valuation reports provided are simple, beautifully designed and powerful. Our clients at ProjectionHub are often working on projections in preparation for fundraising, and Equidam’s valuation reports provide powerful data and a solid basis for their proposed valuation. This partnership makes it even easier to integrate financial projections, which are a crucial part of that process.”

– Adam Hoeksema, Co-Founder of ProjectionHub

How do financial projections impact your startup valuation?

When negotiating your company valuation it is common to hear investors say that they want to value the company based on what you have done in the past, not based on a projected future that may or may not come to fruition.  An investor or a buyer that is looking to acquire your business might want to value the business based on your asset value or based on your cash flow or profits, but there are a few situations where your financial projections can and should play a role in your company valuation.

  1. When you have not turned on monetization yet – A great example of this was when Facebook purchased WhatsApp for $19 billion even though the company had almost no revenue.  The valuation in this situation was almost entirely based on future projections, not past financial performance.  In this case, WhatsApp had a very large and fast growing user base, but their messaging service was free.  Facebook could see ways that they could turn on monetization through advertising or premium features or adding payments, etc that could generate significant revenue.  In this situation the value was almost entirely based on projections for the future.
  2. When you have a material contract or partnership in the future – Projections can often be used in a valuation for a technology company, but might not be so common for a traditional small business.  One situation where projections could be used for a coffee shop or small manufacturing business or other main street small business would be when you have a large new contract or partnership that is guaranteed, but has not been reflected in your past financial performance.  Perhaps you just landed a large government contract that will 3x your annual revenue.  That contract is certainly material and should impact your company valuation even though it won’t show up on your previous year tax return.
  3. When you have a platform with clear opportunities for additional monetization – Tesla is a great example of a company that has always been valued based on future potential financial results, not based on the past.  Tesla has built a platform that provides a number of opportunities for future monetization, and the market is placing value on what is possible.  For example, Tesla’s self driving car technology could allow Tesla to operate a robo-taxi network like Uber, but without the cost of drivers.  Investors can clearly see that opportunity and understand what the financial results could be, so they are willing to include those “projections” into their value of the company.

As a founder of a company, you will be fighting for investors of potential acquirers to include your projections into your valuation.  Even though you might be told that projections are too uncertain to include in your valuation, the reality is that there are countless examples of companies that are clearly valued based on their future potential, not their past results.  Your job is to develop reliable, believable projections that you can back up so that you can justify the highest valuation possible.

About Equidam:

Equidam is the online platform for startup valuation. Our technology enables entrepreneurs to truly learn what drives their valuation, transparently discuss it, and close fair deals.

About ProjectionHub:

ProjectionHub provides financial projection templates, software and CPA support to companies looking to create financial projections for potential investors, lenders and business planning.

  • United States, Canada, Australia, UK, Dubai, essentially all English speaking territories.
  • Financial projection templates, software and consulting.