Financial Projections & Funding Frank Moyes Leeds College of Business University of Colorado Boulder, Colorado Frank Moyes1

Agenda Quiz Financial Projections Funding Investor Presentations Frank Moyes 2 What is the V-word?

Financial Projections Focus Profitability & Cash Flow Frank Moyes 3

Profitability = Revenue – Expenses Financial Viability Income Statement Frank Moyes 4

Operating Income Statement Year 1 Revenues$100,000 Cost of Revenues60,000 Gross Profit40,000 % Gross Profit40% Operating Expenses Sales & Marketing15,000 Development5,000 Administrative10,000 Total30,000 Operating Income$10,000 Frank Moyes 5

Focus on Revenue Model How many widgets, customers, transactions At what price Gross Profit Margins Price vs. Cost to produce Expressed as a % Operating Expense Frank Moyes 6

Cash Flow Profitability Working Capital Equipment Or Cash In vs. Cash Out Cash Flow Frank Moyes 7

Tools Financial Models of Income Statements and Cash Flow Simple Income Statement Most Common Frank Moyes 8

Funding Types & Sources Pros & Cons Frank Moyes 9

Types of Funding Equity Debt Grants Frank Moyes 10

Equity Sell ownership in your company Advantage - permanent capital May lose control (dilution) Responsibilities to investor – requires return Frank Moyes 11

Debt Loan for a set period & interest rate Source – banks, SBA, Guido No dilution Must pay back + interest Start-ups can’t get Vulnerable when things go south Frank Moyes 12

Grants Federal SBIR, CREDA Research – university & corps. State, regional and municipal development agencies Foundations freemoney.com No equity or debt Red tape and strings Grant mentality Frank Moyes13

Sources of Funding Venture capital Angels Banks Friends & family Best? Use Own Resources to First Prove the Concept Frank Moyes 14

Investor Presentations Importance of introduction Opportunity/Need Solution Target Customer Sustainable Competitive Advantage Financial Viability Management Frank Moyes 15