Two years ago I decided it was time to add a bit of rationale to the equity crowdfunding market in the Netherlands. Do the crowdfunding valuations make sense or are the so-called friends, family and fools really just friends, family and – literally – fools?
This is the third (and final) year in a row that I analyzed the crowdfunding valuations in the Netherlands based on data of the main crowdfunding platform Symbid. In the previous blogposts (2014a, 2014b and 2015) I concluded that the valuations have gone up in 2015, that I considered the average pre-revenue valuation high and that (too) high valuations could lead to funding issues later on.
But then again, what’s the value of a promise and who am I to decide if a startup priced too high? Only time can tell. Let’s look at some data first.
To find out what the crowdfunding valuation are, I looked at publicly accessible data from Symbid, the major equity crowdfunding platform in the Netherlands. Just like last edition, I collected Symbid data manually by browsing its website and searching its newsletter emails with upcoming crowdfunding campaigns. I excluded pledge, convertibles and one-off projects such as the movie ‘De Surprise’ from our sample. For 7 projects I did not have the data to calculate the valuation, resulting in a total research sample of 200 projects.
Crowdfunding valuations have again increased over the past year
The post-money valuation is – unlike previous years – not provided anymore by Symbid (why?) but the calculations are simple: post-money valuation = investment amount/ % of equity. The average investment amount and valuation of all Symbid projects are presented in the figure below.
The average project on Symbid raises, or tries to raise, €113k in return for 6.6% equity. This corresponds to a total (post-money) company value of €1.7 million (median: €1.1M). How does this compare to previous years?
The valuations have gone up. The figure below shows that the average valuation of the projects per year increased from €1.4 million before 2015 to €1.8 million 2015 to €2.1 million in 2016 (and across all years €1.7M as mentioned). This corresponds to an increase per year of 23%. The average investment amount also increased, from €101k to €128k, but less equity was provided in return (7.3% vs. 6.1%).