Venture Capital Investor Return Analysis for My Business Plan

Q: What kind of investor return analysis is included in your business plan template for angel investors that invest in my seed round and venture capital investors that I anticipate will invest in my Series A and Series B rounds?

The Return Summary section of our Financial Model and Investor Summary Report (as shown below)  includes a detailed waterfall analysis to show the proceeds that would be paid out to each class of investor at the end of each year of the plan based upon the estimated valuation of your startup as well as the following types of analysis for each class of investor (Preferred and Common):

  • Investment Return Multiple (a $1m investment that returns $4m is a 4x return)

  • Free Cash Flow-Based IRR (based on NPV of cash flows over the 5-year life of the plan expressed as a percentage)

  • Net Income-Based Payback (expressed in the number of months it takes to pay back the investment via Net Income)

In addition, there is an Equity Accretion chart on the lower right of the Summary Report that charts the equity value increase over the life of the plan for each investor class as well as the Founders and Management Team equity holders.

Our app also has an Alternate Summary Report with the same information, but which shows the impact of your alternate assumptions on the Income Statement, Balance Sheet, Cash Flow summaries section as well as the Return Summary investor return section.

Here’s an example snapshot of the Return Summary:

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