ReTest Must Invoice 83,333 Subscriptions Per Month for Its €3M Valuation

German startup ReTest just raised €600K from High-Tech Gründerfonds (HTGF).

ReTest sells subscriptions to its software testing tool to DevTesters and managers for €15 per subscription per month (€150 per year).

Valuation

Assume that ReTest sold a 20% equity stake to HTGF.

Then they are valued at €600K / 20% = €3M post-money.

How many subscriptions must ReTest invoice each month for its €3M valuation?

Exit

HTGF labels this investment as a seed round.

Assume that they want to make 10x on their winners.

And that HTGF needs 2x to compensate for dilution.

Then they want to make 10 * 2 = 20x on their investment.

And ReTest needs a €3M * 20 = €60M exit value for its €3M valuation.

Revenue

Assume that ReTest trades at 4x trailing 12 months revenue at exit.

And that there is no cash and debt at exit.

Then they need an average of €60M / 4 / 12 = €1.3M in monthly revenue at exit for their €3M valuation.

Subscriptions

ReTest charges DevTesters and managers €15 per subscription per month.

Then they must invoice an average of €1.3M / €15 = 83,333 subscriptions per month at exit for their €3M valuation.

DIY

Different assumptions?

Make a copy of the spreadsheet used for this post (File > Make a Copy…), put in your assumptions and draw your own conclusions.


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