1000 Angels, a OneVest-owned network that connects vetted startups with investors, launched a new tool to help investors determine the potential value of the startups they want to invest in: the Startup Return Calculator.
The calculator is open to investors and entrepreneurs, and requires users to fill out questions, such as the amount of years of company revenue projections and annual costs of goods sold. Alejandro Cremades, co-founder and executive chairman of Onevest, said that the tool is valuable for investors that want to know if their investment opportunities are worthwhile. Entrepreneurs can leverage the startup calculator during fundraising conversations to demonstrate the potential initial rate of return and cash-on-cash return investors could receive.
“This is a tool we use to analyze potential returns for investment opportunities we evaluate for 1000 Angels members. The questions asked help us compare different startup investment opportunities on an apples to apples basis by both calculating potential IRR and cash on cash return,” said Cremades. “We have found it very useful and thought other investors and startups might find it useful as well in analyzing the risk and return potential of prospective investments.”
As there are many non-tangible factors that go into the decision to invest in a company — such as trust in a founding team’s track record — Cremades said that this acts as supporting tool and not a replacement. “The calculator is an added benefit to the investor when performing the due diligence on the company. The more information and tools you can arm yourself with the better.”