Mid-term presentation of Master’sThesis

Supervisors: Alain Wegmann - lamswww.epfl.chYves Pigneur - www.hec.unil.ch/yp

Thursday, 30th June 2005Rolf Lindbäck

Overview

1. The subject

2. Action plan

3. The work so far

4. Future work

1. The Subject

• 3 parts:– Comparison & integration of SEAM and EBMF– Applicability of analysis frameworks for VCs– Development for a CAD tool for quantitative

analysis

2. Action Plan• Intro • Motivation

• Introduction to SEAM and EBMF √• GBAW Case Study using SEAM and EBMF √• Compare SEAM and EBMF √

• Explain what VCs are looking for √• Compare this to SEAM and EBMF √

• Looking for new opportunities– Active actors modelling √– System dynamics modelling √ X– Obelix modelling X

• Conclusion

3. The work so far (1)

• GBAW Case Study using SEAM and EBMF– Observations:

• EBMF based on Balanced Scorecard. It is created in order to describe a business model

• SEAM based on Porter’s Value System. It is created in order to understand a “business idea”

• It is possible to find every notion of the EBMF in the SEAM’s SAR section

– Intermediate conclusion:• Even if SEAM is conceived in order to highlight the relations

between the actors, EBMF describes them better• Difficult to combine both because of the fundamental

difference in theories applied

3. The work so far (2) - VC• Pre-screening:

– Apparent deal quality• mentioned by whom?• Quality of business plan, other investors, accounting firms?

– Investment Compatibility• Does the company fit geographically-, personal- and portfolio-wise?

• Management:

– Quality of management team• Past success/failures, commitment, good enough skills, motivation

– Board of advisers• Business Opportunity:

– Potential of the product• Alsop’s formula: Quality+Innovation+Smarts+Money-Pain2 = Success

– Business Plan• Markets and customers• Products and services• Distribution channel• Finance

– Competitive strategy• Existing and future Competitors• Proprietary Advantage• Market share and First-Mover Advantage• Competitive positioning

• Intangibles

– Timing– Investors Gut Feeling

• Legal

– Company Business form– Intellectual property protection– Financial structure– Protection mechanism for fair treatment

• Covenants, share conversion, voting rights• Financial

– Valuation of the company• Three different ways: Market comparables, DCF, Venture Method

– Its robustness– Probability of success

Focus in new approach: More focus on financial part of the business modelling

3. The work so far (3)• Looking for new opportunities

– Detailed business modelling• Understand how the product is sold… -> “product flow diagram”• …to better understand the cash flow… -> “cash flow diagram”• …which finally can give a good valuation of the business and the company

– System Dynamics• Facilitates the long term modelling of the business with possibilities to play with the

assumptions• The SeamCAD tool is already developed at EPFL…• …which is based on the systemic approach of the business…• …and together with SimSEAM, it respects the basics of System Dynamics

– Intermediate conclusion:• It gives the opportunity to model the business and the profitability of every player which

is important for a sustainable business plan• The valuation aspect is still to be proven

• Underlying papers– Forecasting Investment opportunities through dynamic simulation, Stephen

R.Parker 1997– Gordijn – OBELIX

4. The future work

• Work on the valuation aspect

• Set up different scenarios which reflect possible strategies – strategic value

• Try out the case-study using OBELIX