You want to value an investment into a startup company. The company has the following revenue forecast:

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue 500.000$ 1.850.000$ 5.500.000$ 8.500.000$ 14.000.000$

Each customer of the company spends approximately 1.100$

Its cost structure is as follows: Gross Margin is 85% (this means it has a cost of goods sold of 15% of Revenue) The companys all-in CAC (Customer Acquisition Cost) is approximately 300$ per customer (this includes marketing cost, sales team, tradeshows, etc.) This is a one-time cost the company spends each time it gets a new customer.

The company has the following outlook for its G&A (General and Administrative cost) and R&D expenses.

Year 1 Year 2 Year 3 Year 4 Year 5

G&A 200.000$ 400.000$ 550.000$ 750.000$ 1.000.000$

R&D 500.000$ 600.000$ 750.000$ 1.000.000$ 1.200.000$

Starting in year 6 the company expects the following perpetual growth with respect to year 5 numbers: Revenue 5% per year G&A 2% per year R&D 1,5% per year Assume all revenues and costs occur at the end of each year.

a) Find the value of the company today if you apply an annual rate of 60% (This seems high, but it is a typical value used for high-risk startup company valuations)

b) What is the share of the company that you would demand to make a 1.000.000$ investment?

c) What is the IRR of the project with the 1.000.000$ investment made at time t=0? (use Excel to solve)