Eurazeo

Question 1

o Deep dive in into Tech Verticals

Answer 1

▪ Vertical Software
▪ Horizontal Software
▪ Data and Infrastructure (Datacollection)
▪ Cyber security
▪ Deep Tech, AI and Semiconductors
▪ Climate Tech

Question 2

Why Eurazeo

Answer 2

Really positive internship report WHU

leader within the SaaS and technology space

Question 3

Strenght Weaknesses

Answer 3

Strenghts
-Resilient and able to work long hours
-Work well in teams
-Calm under stress

-Weaknesses
-Take too much time to make important decisions
-Hard to say no because I want to push/improve myself

Question 4

CEO

Answer 4

CEO
-Current CEO: Scott Adelson

Question 5

Burn Rate

Answer 5

Burn Rate = (Starting Cash – Ending Cash) / Number of Months

Question 6

Annual Customer Value (ACV)

Answer 6

ACV = Total Annual Contract Value / Number of Customers

The average annual revenue generated from each customer contract, excluding one-time fees

Aids forecasting

Question 7

Net Revenue Retention (NRR)

Answer 7

Measures the percentage of revenue retained from existing customers over a specific period, accounting for expansions, contractions, and churn.

NRR = (Starting Revenue + Expansion Revenue – Churned Revenue) / Starting Revenue × 100

> 100% is good

Question 8

SaaS Business Models: B2B vs. B2C

Answer 8

B2B (Business-to-Business):
-Longer sales cycles
-Higher customer lifetime value (CLTV)
-More complex pricing and contracts
-Typically involves annual or multi-year subscriptions

B2C (Business-to-Consumer):

Shorter sales cycles

Lower CLTV
- Simpler pricing models
- Often involves monthly subscriptions

Question 9

SaaS Metrics Overview

Answer 9

ARR (Annual Recurring Revenue)

Revenue Multiple

EBITDA Multiple

Question 10

Why is B2B better

Answer 10

• Multiple year contracts
• Super nice for NWC (negative nwc)
• Bc now subscribed but used later / Paid in advance

Question 11

Saas I/S

Answer 11

1. Revenue:
   a. Recurring Revenue
   b. Non-recurring rev: one time fees
2. COGS
   a. Hosting Costs (20 -30% AWS)
   b. Custoomer support
   c. Licensing
3. OpEx
   a. Sales & Marketing
   b. R&D
4. Profitability Metrics

Gross profit target: 70-80%

Question 12

B/S Saas

Answer 12

Liability
-Deferred Revenues

Asset
-Capitalized Development Costs
-Neg NWC
-Deferred contract acquisition costs

Question 13

What is growth Equity

Answer 13

o Type of Private equity investment focused at companies which are scaling their operations “scale-ups”. Investments vary from series B to D/E and often are between VC and classic PE in size.

when business model is proven

Question 14

Nuanced view of Growth investing

Answer 14

o Compared to VC: Less risky because the established products and proven market fit

o Compared to PE: Does not involve taking full control of the company or using heavy debt, focus on growth without changing the ownership structure

o Growth Investing requires unit economics, market dynamics, and operational knowledge

Question 15

How do firms evaluate investment prospects?

Answer 15

o Market opportunity
▪ Size and growth of the market
▪ Competitive landscape

o Financial performance
▪ 20%+ growth rate
▪ Profitability

o Business model
▪ Scalable
▪ Strong unit economics (customer acquisition cost, lifetime value)

o Management team
▪ Experience, vision

o Competitive
▪ Differentiation through partners, technology, brands or network effects

o Exit potential
▪ Clear IPO or acquisition strategy

Question 16

ARR Multiple

Answer 16

ARR = MRR × 12

ARR Multiple = Enterprise Value (EV) / ARR

ARR Growth Formula:
ARR = Starting ARR + New Customers + Expansion - Churn

Question 17

P/S Ratio

Answer 17

Formula:
P/S = Market Capitalization / Total Sales

Applicability: Ideal for companies with limited or negative profitability, such as early-stage SaaS firms.

Peer Comparison: Facilitates benchmarking against industry peers, offering a relative valuation metric.

Forward-Looking Indicator: Less influenced by current cost structures, providing insights into future profit potential.

Sector Variability: P/S ratios vary across industries. For instance, as of early 2025, the average P/S ratio for SaaS companies stands at approximately 8.12, with large-cap firms averaging around 9.8

Question 18

o How to value a SaaS company with not profitability

Answer 18

▪ Do a DCF model which prioritizes revenue prediction, based on ARR and Cashflows. Compare the company using EV/Revenue multiples from similar companies or transactions

Question 19

o Challenges of AI and Climate change Tec?

Answer 19

▪ Lack comparable, market uncertainty and rapid evolvement and regulations. I would take these risks into account when doing a DCF and look at risk adjusted, and trajectory adjusted DCF models

Question 20

o Why do companies with similar revenue and growth rate have different valuations?

Answer 20

▪ They might be different in profitability, management team strength, market leader or geography

Question 21

o What does EV/Revenue ignore

Answer 21

▪ Operational efficiency and profitability which is important in the long term. Especially, customer acquisition costs and churn analysis to assess company efficiency (customer loss rate)

Question 22

Growth Metrics

Answer 22

Customer Acquisition Cost (CAC)

Customer Lifetime Value (CLTV)

Market penetration rate

Question 23

Customer Acquisition Cost (CAC)

Answer 23

● Acquisition cost per new customer
● CAC = Total Marketing Cost / Customer Acquired
o Other than marketing, you can ADD
▪ Wages
▪ Cost of software
▪ Cost of outside consultants
▪ Overhead

Question 24

Customer Lifetime Value (CLTV)

Answer 24

● SHOULD BE 3x HIGHER than CAC

● Important for goof bottom line, sustainable growth, good CF

● Most businesses say, customer retention is more important than customer acquisition

● CLTV = Customer Value * Average Customer Lifespan

● Customer value = average purchase value * frequency rate
o Purchase value = Revenue over timeframe / # of purchase
o Frequency rate = # of purchases over period / # customers during period

Question 25

How to increase customer value?

Answer 25

o Raise prices o Interview most valuable customers o Invest in revenue expansion o Improve customer experience

Question 26

Pre Money vs Post Money

Answer 26

o Pre-money Valuation ▪ Value of the company before new investment (worth of company before inv.) o Post-money Valuation ▪ Value of the company after the investment (worth after inv.)

Question 27

Dillution Sources

Answer 27

o Dilution effect on ownership shares ▪ Funding ▪ IPO ▪ Increasing employee option pool ▪ SAFE (simple agreement for future equity) ● Safe holders get future equity ● Post-money SAFEs (allows VC to keep their equity undiluted)

Question 28

SaaS ARR waterfalls & cohort analysis

Answer 28

o ARR Waterfall analysis ▪ Tracks the growth of ARR by breaking it down ● New ARR (from new customers) ● Expansion ARR (Upselling and cross-selling) ● Churned ARR (revenue lost from cancellations) o ARR Cohort Analysis ▪ Analysis customer behaviour over time, since when they first became customers ● Tracks customers retention and CLTV ● Identified high value customer segments

Question 29

SaaS accounting

Answer 29

o Revenue recognition: Subscription revenue spread over contract duration o Deferred revenue: Payments received but not recognized o Capitalized software development costs ▪ Overhead costs that are incurred in Balancesheet instead of incurred as an expense ▪ Why ? to increase profitability (NI line) as they see software as an asset which is depreciated o Typically, a – CF, upfront customer acquisition costs and improve with strong customer retention and ARR expansion

Question 30

Market Thesis Template

Answer 30

o Market overview (definition and recent developments) o Main drivers (Tech., regulation, consumer shifts) o Market Risks (events) o Competitive landscape (Key players, barriers to entry) o Investment rationale (Why is it an attractive market) o Metrics (TAM, CAGR, Market pen) o Business models

Question 31

LTV / CAC Ratio

Answer 31

<1.0: Acquisition costs exceed customer value. 1.0 – 2.0: Marginally profitable; may require optimization. 3.0 – 4.0: Optimal range; suggests efficient customer acquisition. >5.0: Potentially under-investing in growth opportunities.

Question 32

AR / CAC Ratio

Answer 32

Formula: AR / CAC = Annual Revenue per Customer ÷ Customer Acquisition Cost Ideal Benchmark: 1.0 – 1.5 Interpretation: <1.0: Acquisition costs exceed the revenue generated. 1.0 – 1.5: Balanced; suggests a sustainable acquisition strategy. >1.5: Potentially under-investing in customer acquisition.

Answer 33

Key Drivers -Rising pet ownership and healthcare spending -Adoption of AI, cloud computing, and telehealth -Regulatory support for digital health records Market Risks -High upfront costs for small clinics - Regulatory hurdles in emerging markets Competitive Landscape Leaders: IDEXX, Covetrus, Hippo Manager Emerging: VetBadger, AcuroVet, Petofy OPHR Slashdot Investment Rationale -High recurring revenue potential -Scalability via cloud infrastructure -Fragmented market ripe for consolidation Key Metrics -TAM: ~$987M by 2030 -Penetration: ~30% Growth: ~12.7% CAGR Business Models -SaaS (Subscription-based) - Tiered pricing for scalability -Integration with diagnostic tools

Question 34

Pets in Germany

Answer 34

Total Pets (2024): 33.9 million across 44% of households. GlobalPETS Cats: 15.9 million (25% of households). GlobalPETS Dogs: 10.5 million (21% of households) 2030 Projected Size: USD 179.0 million. Grand View Research CAGR (2025–2030): 11.4%.