You may have got to the stage where you have started to try to place a value on your idea / product. If you have then we want to know about how you have gone about this, what assumptions you have used to reach your conclusions and what the results of the exercise were? If you have based your valuation on your knowledge of similar products /deals i.e. benchmarks, then tell us about those and why you felt they were relevant. If you have a spreadsheet available showing your calculations then please email or post it. We also want to know here about any other previous investments in your project over the last 12 months. Who has invested, how much and was the valuation based on any benchmarks?
We have not been through a valuation exercise as the project is effectively still at the R&D stage. If we are successful in this proposal and obtain funding from NESTA, a new company will be set up to undertake the project. This company will be owned in majority by Michela Ledwidge personally, and her UK company thequality.com. A minority interest will be available for acquisition by potential investors, including NESTA.
In order to attempt a valuation exercise at this early stage of the project, focus is primarily on the value of intellectual capital, including both human and structured capital of Michela Ledwidge personally, and thequality.com.
Human capital is very high due to the intellectual resources possessed by the director, Michela Ledwidge. Over the years, Michela has developed thequality.com and generated brand strength in order to generate work in many countries. Invitations from new and varied companies and events have included boo.com (UK/USA), Brilliant Digital Entertainment (Australia/USA), Europrix (Austria), Gothenburg Art Sounds Festival (Sweden). This has proved the potential Michela has to generate interest in her work. Michela is a very competent and motivated individual who has proven ability to develop an innovative idea, produce and then market the final product.
“Horses for Courses” reflects this potential. It generated strong interest globally and won the Web3D Art award at SIGGRAPH beating an entry from Disney. Michela has been able to attract proficient advisers at a very early stage in this project, receiving support and the assistance of many on a shoestring. This further supports her motivation and ability to get this project off the ground with the aim of seeing this through to completion.
Structured capital for thequality.com is primarily its innovation power. The company prides itself in breaking new ground and enjoys the challenge. “Horses for courses” has received press (e.g. Wall Street Journal, Sydney Morning Herald) for its technical imagination and visual presence. This got people talking and thinking, so much so that Michela has been invited to lecture on the principles behind its development on many occasions.
Innovation is a priority and this project is a progression in terms of technical product deliverables from “Horses for Courses” since it is pushing the interactivity element to a much larger scale; films. This new project will have income generation ability through DVD sales. It will add a new dimension to mainstream film production, taking the experience to a new level. This project will deliver a completely unique product that will open a new market for the company, creating a temporary monopoly. The aim is to then attract interest from the major film companies to generate a working relationship that will continue to create new products using the conceptual and technical know how behind this project.
A valuation based on models such as DCF or EVA is meaningless at this point in time, hence has not been calculated. At the end of this project when the technical aspects have been developed further and the SANCTUARY short film and DVD game console has been created, the deliverables will be put on the marketplace.
We can speculate that the value of intellectual capital will increase over the life of this project. As deliverables are created and put on the marketplace in the context of pilots, brand recognition will develop as we aim to create a unique association for film goers between film and game interactivity. SANCTUARY will have the unique quality of being treated as a generated asset that can be reinvested into the technical game console branch of the project to create the many visual loops that will be required.
the paragraph starting "we have not yet been through..." appears twice in different forms.
It strikes me that the first section (in italics) is product-orientated, and the second company-orientated. It might be worth making a clear distinction by putting up two clear headings; one for company valuation and one for product valuation.
Posted by: ken at November 28, 2003 04:43 PM