Ovinto-Preparing For A Series A Venture Capital Investment Round

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CASE 2019-04-C
OVINTO: PREPARING FOR A SERIES A VENTURE CAPITAL

INVESTMENT ROUND
Sophie Manigart
Purchased for use on the Venture Capital and Growth Finance, at Imperial College London.
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Taught by Miguel Meuleman, from 1-Jun-2020 to 3-Jul-2020. Order ref F384072.
1. Abstract
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In late 2018, Frederick Ronse, the founder and CEO of Ovinto was evaluating the available options for
Order reference F384072
financing its next development stage. Ovinto is a company which is active in big data analytics and the
Internet of Things (IoT) within the rail freight industry. It was gaining traction in the field and had lined
up some prominent customers. Its recent partnership with SAP, the global software solutions
company, was also a major step forward and Frederick felt it was now an appropriate time to drive
the company on a high growth trajectory. However, this would require an investment of €5 to €10
million and prompted a number of important questions.
- How much investment should Ovinto try to raise?
- How could they establish a valuation that would be agreeable to current investors (and
Frederick) but would not deter potential investors?
- Who might these investors be, and what value could they add to Ovinto?
Frederick was mindful that raising equity for the company’s growth was not only a financial decision,
but also a highly strategic one.
• This case was written by Sophie Manigart, Full Professor in Corporate Finance at the Vlerick Business School and
Ghent University, and Faculty Dean at the Vlerick Business School. It is intended to be used as the basis for class
discussion, rather than to illustrate either effective or ineffective handling of a management situation.
• The case was compiled from interviews with the entrepreneur, field research and published sources.
• Copyright © 2019 Vlerick Business School, Belgium. No part of this publication may be copied, stored,
transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the
copyright owner.
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2. The business proposition of Ovinto: To make rail cargo sexy again
Ovinto was founded in 2010 by Frederick Ronse, a passionate entrepreneur who had extensive
experience in Business-to-Business (B2B) sales. The company was established to address a major
problem in supply chain logistics, namely the lack of connectivity and integration of rail freight. While
road, air and maritime transport networks are completely connected “in rail cargo, everything is still
handled like 100 years ago, by manual actions, no integration and minimal monitoring”1, Frederick
commented in a recent Forbes article. Benjamin Twisk from leading chemical company INEOS Oxide
highlighted that whenever a train leaves a production plant, they know for a fact it has left. “However,”
he adds, “we don’t know when it’s going to arrive, and today we receive quite a lot of complaints that
the train hasn’t arrived on time.” 2
To address the established lack of information in the rail freight industry, Ovinto commenced by
developing its hardware in close collaboration with the European Space Agency (ESA). Before this

undertaking, rail freight cars were essentially just pieces of metal, without energy supply or hydraulics.

Consequently, the use of automatic telemetry or connectivity which would allow the position or other
relevant parameters of the freight car to be tracked was not an option. Without this technology
excessive human time and effort was required to establish the exact location of a freight car after it
had left, which in turn lead to high costs, inefficiencies and mistakes, and even ‘losing’ complete trains.
In response Ovinto patented sensors which enable not only the position of rail freight cars to be
measured, but also their temperature and pressure, or even the state of the brakes. All sensors are
satellite communication enabled and this ensures highly reliable global coverage at any time. This
extends to remote areas where there is no Global System for Mobile communication (GSM) or internet
connectivity, for example in the middle of the Sahara Desert. The lack of electricity supply is a key
issue in rail freight cars so the Ovinto sensors have been specifically designed to ensure low battery
consumption. In addition, they also have the highest explosion safety certification, ATEX and this
allows them to be used in freight cars which are transporting extremely hazardous goods.
However, while developing the appropriate hardware was essential the selling of the sensors to rail
freight car owners/users proved to be difficult. This was due to the lack of tools which could easily
analyse and interpret the data generated by the sensors. As a result, Ovinto pivoted its activities into
developing a Big Data, predictive analytics platform which could integrate Internet of Things (IoT) and
telematics capabilities into a company’s business management software. Ovinto’s software platform
not only uses data collected from its own sensors but can now also process data from any relevant
device: it is therefore 100% hardware independent.
1
https://www.forbes.com/sites/sap/2019/03/07/how-a-19th-century-relic-can-help-solve-21st-century-
issues/#339889466ea9
2
https://www.forbes.com/sites/sap/2019/03/07/how-a-19th-century-relic-can-help-solve-21st-century-
issues/#339889466ea9
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According to consulting firm McKinsey, advanced analytics in the rail freight industry can quickly
reduce maintenance costs by 15 to 20 percent, and this adds up to global savings of more than €7.5
billion per annum.3 Examples of solutions that the Ovinto software platform now provides are:
- Condition based maintenance which alerts freight car owners when maintenance is needed,
based upon real mileage and usage;
- Predictive alerts to production facilities when railcars are delayed, which enables the
elimination of near shutdown events and the reduction of safety stock;
- Automatic invoicing within one hour after arrival, thanks to its full integration with the SAP
Cloud Platform.
Analysis undertaken by Vlerick Business School with one of Ovinto‘s customers indicated that an
investment of €600 per railcar per annum could result in annual cost savings of €4,000 together with

an additional turnover of €160,000 per railcar.

In the following video Frederick Ronse explains what Ovinto stands for, and how he perceives its
future: https://youtu.be/PuLA60cfUds
3. The market
A top-down analysis of the rail freight industry reveals a huge market potential for Ovinto and its
product offerings. Worldwide there are approximately 8 million active rail freight cars, and these can
all benefit from the enhanced intelligence Ovinto provides. However, users have to be motivated to
invest in this specific part of the supply chain and the external pressures on rail freight owners and
customers are expected to increase. For example, the European Union now requests better visibility
when hazardous goods are transported.
Rail freight transportation is also expected to grow worldwide and may be an important contributor
to addressing climate change problems, overcrowded roads and strained resources. Trains represent
the greenest and most sustainable form of transportation as they burn less fuel per ton-mile than
other vehicles.4 According to the European Commission’s Shift2Rail initiative, a four percent increase
in rail shipping worldwide would result in a 10 percent reduction in road cargo.5 This tangible benefit
could be a strong incitement to governments worldwide to develop and promote this form of
transportation.
3
McKinsey (2016). Huge value pool shifts ahead – How rolling stock manufacturers can lay track for profitable
growth.
4
Davis, S.C, Williams, S.E., and Boundy, R.G., 2017. Transportation Energy Databook, Edition 36,
https://info.ornl.gov/sites/publications/Files/Pub104063.pdf
5
https://shift2rail.org/
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Within this market there are a number of stakeholders who are active in the rail freight value chain
and may be directly interested in the enhanced intelligence provided by the Ovinto platform. Firstly,
rail car owners who typically lease their equipment to users on an annual basis want to understand
usage levels and ensuing maintenance needs. Secondly, the users of the freight cars which transport
their goods i.e. “shippers” need to know where and when they can expect their shipped goods in order
to achieve supply chain optimisation. Thirdly, there are operators who organize the logistics of
shippers and could benefit from awareness of the best routes for a particular shipment, based upon
real-time information like maintenance or congestion. Finally, infrastructure operators could use the
available intelligence to optimize the usage of the rail tracks.
As the Ovinto user base grows to include these different stakeholders, a valuable database on the
usage of rail freight cars will develop. The data can then yield important insights for additional
stakeholders such as rail freight car manufacturers who could gain a deeper understanding of their
equipment performance, insurance companies who want to improve their risk analysis models, or

governments wanting to promote rail freight as a transportation mode.

4. Ovinto in 2018
Thanks to ESA and project funding from Vlaio6 it took Ovinto seven years to develop its patented
sensors and by 2018 the company had several top tier, global customers including Evonik, INEOS,
LyondellBasell, Sabic and AkzoNobel. In total, 1500 rail cars were now connected with Ovinto’s
sensors, and as no other sensors could match their high quality ATEX-certified hardware Ovinto’s
solution was especially valued by European chemicals companies. This generated an annual turnover
of around €1 million, and on the whole this amount was recurring as customers typically engage in
long-term contracts. To date, not a single Ovinto customer has terminated an on-going contract.
2018 was a particularly important year in Ovinto’s development. While the company originally
positioned itself as a hardware company selling sensors, in 2018 it pivoted to become a software
company selling its data intelligence with the option to use its own sensors to capture the necessary
data. Ovinto also became a certified partner of SAP, and this implied that, following thorough
technical due diligence SAP formally endorsed the Ovinto solution. This significantly increased
Ovinto’s legitimacy with global and conservative prospective customers, especially as the latter are
typically reluctant to source from small, unknown start-ups. SAP now marketed and sold the Ovinto
product through its SAP App Centre and this immediately resulted in 2 pilot projects with U.S. based
customers. Entry into the American market was a key priority for Ovinto, as it represented 1.6
million rail cars. These key developments boosted Ovinto’s growth from 1500 connected rail cars in
2017 to 2100 in 2018 and produced an operational break-even situation in the last months of 2018.
All of these achievements were accomplished by a very small but highly efficient team. Alongside the
entrepreneur and founder Frederick, whose focus was business development and operations,
Salvatore Castellano was a key employee from the start. Salvatore was responsible for the
6
Vlaio is a Flemish government agency providing, amongst others, subsidies for innovative projects.
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CASE 2019-04-C
technological development of both hardware and software and owned 5% of Ovinto’s shares which
ensured a strong tie to the company. He led a team of 3 which included software developers and
technical operators, and one other employee focused on inside sales and marketing, mainly servicing
prospects during the (long) sales cycle and the pilot test. This was a crucial phase to make sure
prospective customers were actively exploring the platform’s features and appreciating how these
features might address their specific problems.
5. Financing so far
Ovinto’s financing strategy was a textbook example of start-up financing. Up until 2016, the
company was mainly financed through the entrepreneur’s own limited funds and bootstrapping
formed a key part of Ovinto’s DNA. The team had always been very small, its premises were as cheap
as possible, and corporate expenses were kept to a minimum. In periods when cash flow was

constrained, Frederick even delayed paying his salary. Subsidies totalling €3 million from European

and regional government agencies (ESA, Vlaio and Imec) were therefore instrumental for Ovinto to
develop its innovative hardware and software. Bank financing was also crucial as the sensors had to
be pre-financed, and while Ovinto kept its inventory of sensors as low as possible, components had
to be ordered in batches and their suppliers paid, and employees had to be paid to assemble the
sensors before being able to sell them to customers. In addition, Ovinto’s customers were typically
large corporates who imposed non-negotiable invoicing and payment terms on their suppliers. The
government was also slow in providing the promised project funding which resulted in substantial
Days Sales Outstanding (DSO) as well as a working capital requirement financed by a leading Belgian
bank at a low interest rate up to the value of the inventory (which served as collateral). Customers
were also important to the financing of Ovinto’s activities, despite the long payment delays that
sometimes occurred.
Importantly, at the end of 2016 Ovinto raised €1 million equity from a business angel in return for a
10% stake in the company. The business angel, an experienced and respected businessman, was a
patient investor who helped in setting the strategic course of action for Ovinto.
6. Designing a financing strategy to boost growth
Business-wise, Ovinto was ready for a step-up in its growth trajectory. The recent Internet-of-Things
(IoT) and Artificial Intelligence (AI) hypes were raising awareness of the potential of digital
transformation in Ovinto’s market, where customers were notoriously conservative and not always
inclined to embrace innovations. The SAP partnership and its ensuing marketing activities had
significantly increased Ovinto’s visibility within its market and Frederick was therefore optimistic
that it should be possible to reach €50 million revenues and €25 million EBITDA in 2024. This would
position Ovinto as an attractive acquisition candidate, providing a desired exit for all shareholders.
In order to grow, however Frederick felt that more money was needed from a new investor. A
typical sales cycle for the company was long and had to be entirely pre-financed. Therefore, new
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CASE 2019-04-C
sales and in-house people had to be hired and trained, and to support growth in its biggest potential
market a new office had to be opened in the US. Further investments in the development of both
the software platform and the hardware were also needed to keep abreast of competition.
In order to prepare for this A-round, Frederick developed a financial plan7 (see Excel document) to
understand just how much money would be needed to reach this goal. The plan reflected his most
realistic assumptions, based upon past experiences and the expected way forward, but Frederick
also understood that the future would be uncertain, and that reality might not match his
expectations. Therefore, it was important to identify the most important assumptions in Ovinto’s
financial plan and understand how missing targets might impact its financing needs.
Raising the amount of money predicted by the most realistic scenario might limit dilution for the
current shareholders, but Frederick did not want to jeopardize the whole company and risk
bankruptcy because of his growth plans! He therefore concluded that it would be wise to include a
buffer for unexpected drawbacks. Given the uncertainty on what may happen in the future,
additional debt (beyond the credit line used to finance inventory) was not a viable option, and

therefore he was considering a new equity investor. This in turn raised the question as to what a

correct valuation might be. What equity stake would he have to relinquish in return for the money
raised? Too high a valuation could scare off potential investors, but Frederick also did not want to
give up all the years of hard work too cheaply, especially since he felt that Ovinto was now on the
verge of a real break-through. In addition, he had to make sure that his business angel investor was
comfortable with any deal and would feel they had received fair treatment. Frederick was very
aware that Ovinto would not continue to succeed without this angel investor, who had taken a lot of
risk at a time when Ovinto’s future was even more uncertain.
To answer these questions, Frederick gathered information about recent venture capital deals,
acquisitions and Initial Public Offerings (IPOs) in Ovinto’s industry. This type of information is
typically private and was therefore not easy to acquire, and while the information was highly
incomplete (see Appendix 1) Frederick felt that it was still useful. Figure 1 shows median valuations
of early stage venture capital deals, as recorded by commercial database PitchBook.
7
The financial plan is provided as a separate Excel document. Appendix 3 explains its build-up.
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Figure 1: Median valuation of early stage venture capital deals
As well as the financial investment that was required Frederick also felt it was important to attract a
new, highly qualified and active investor who could be a partner and help grow the company. Who
should he approach? Would another business angel be optimal? He had had good experiences with
his first angel but did not know if it would be possible to find another with sufficiently deep pockets
and complementary expertise and experience. Should he choose an experienced venture capital
investor? While such an investor could be highly instrumental in helping Ovinto grow, Frederick was
aware of their reputation as greedy “vulture” investors who may not always work in the
entrepreneur’s best interest. That said, he also knew some fellow entrepreneurs who were
extremely impressed with their venture capital shareholders. An alternative could be corporate
venture capital investors, or outright corporate investors as they could provide relevant business
experience and intelligence, alongside the money. However, corporate investors might steer Ovinto
too much towards their own strategic agenda and exiting in a trade sale might be more difficult with
a significant corporate shareholder. These concerns may be mitigated when the more arm’s length
corporate venture capital department invests were compared to the corporate itself. Government
venture capital investors could be another option and might bring in the money, but would they also
be able to bring in the skills needed to internationalize?
Following identification of the most appropriate type of investor, Frederick would need to develop a
long and a short list of concrete potential investors, investors that would be interested in providing
the required amount to a young European scale-up, active in AI and IoT within a B2B environment.
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7. Additional material on YouTube

• Industry 4.0 by Ovinto at INEOS, Evonik & Sabic https://youtu.be/cufR9f1kYoo
• Presentation Ovinto: What do we do? https://youtu.be/dxqJPeLWAt4
• What makes Ovinto unique? https://youtu.be/MTKuvf323Ag
• Ovinto Sat: a revolutionary tracking system https://www.youtube.com/watch?v=S-
IvlLBuQCM
• ESA & SAP Space Business Accelerator: https://youtu.be/9JGkh4b38ak
8. Case questions
1. How much would you advise Ovinto to raise (first half of 2019)?
The most realistic financial plan is provided as an Excel file. When answering this question take into

account that Ovinto may want to make one or two acquisitions in the coming years in order to

support its growth. These potential acquisitions have not been included in the financial plan (neither
in the revenues / costs or in CapEx). How much would you advise Ovinto to raise in 2019 and how
much at a later date, and based upon which milestone? What are the most critical assumptions in
the financial plan?8
2. What valuation should Ovinto aim for?

You can use any valuation method that seems appropriate to answer this question. What is the
minimum valuation that Ovinto should strive for? What is the maximum valuation it could attain? If
the valuation is too low it could lead to excessive dilution for the current shareholders, but a too
high valuation might scare off potential investors. Based upon your proposed target valuation, what
would be the capitalization table after the A-round?
3. Which type of investors would you target?
Should Ovinto aim for angel investors, independent VC, corporate-related VC, government VC,
others? One investor or a syndicate? Local or international investors? Why? Clearly support and
explain your preferred choice.
4. Who would you advise to target?
Frederick needs the names of potential investors here! Who would be on your long list of potential
investors? From your long list, who would you select as preferred investor(s)?
8
This financial plan might also be used as a basis to introduce sensitivity analysis around the most important
assumptions and/or Monte Carlo analyses. This would allow a deeper understanding to be gained on what an
appropriate cash buffer might be.
8
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Appendix
Appendix 1: Information on recent Series A deals in comparable companies
Series A Sales MEUR raised

Sigfox deploys a low-bandwidth dedicated network enabling a global,
simple, low-cost and low-power solution to connect things to the internet
2011 Sigfox Series A 0,5 2,0 (IoT).
KONUX offers an industrial IoT solution combining smart sensors, data
fusion and AI-based analytics to increase asset availability and optimize
2014 Konux Series A 4,3 16,0 maintenance planning.
ADVEEZ develops innovative hardware & software solutions for IoT &
2016 Adveez Series A 1,8 3,3 Safety to monitor critical assets at airports, seaports, in cities & buildings.
Sea Machines Robitics is he leader in pioneering autonomous control and
2018 Sea Machines Robotics Series A 5,7 10,0 advanced perception systems for the maritime industry.
Facilio is the leading IoT-driven enterprise platform and software for multi-
2018 Facilio Series A 1,0 6,4 site facility operations and maintenance.
Pensa's autonomous perception system delivers a lower cost, highly
2019 Pensa Systems Series A 1,0 7,2 accurate inventory visibility system for retailers.

Sources : Crunchbase, FactSet, Amadeus, company websites
Appendix 2: Valuation of recent transactions
Valuation (MEUR) Sales (MEUR) EV/Sales EV/EBITDA

2012 Fleetmatics IPO 585,1 127,5 4,6

2012 ABAX Acquisition 3,6

2013 KSD Software Acquisition 1,8 14,0
2013 Aggregate Knowledge Acquisition 119,0 30,7 3,9
2014 Octo Telematics Acquisition 408,0 90,0 4,5
2014 Xata Acquisition 3,2
2014 Open Roads Consulting Acquisition 9,2 1,0
2014 Actuate Acquisition 330,0 107,2 3,1
2015 RouteMonkey Acquisition 9,1 1,7 5,4 13,3
2015 GT Nexus Acquisition 675,0 150,0 4,5
2015 Novero Acquisition 64,8 1,1
2015 Webtech Wireless Acquisition 19,0 0,9
2016 Zonar System Acquisition 350,0 91,7 3,8
2016 CMA Acquisition 10,8 2,3 11,0
2016 Telogis Acquisition 850,0 120,0 7,1
2016 ChartCo Acquisition 71,0 1,5
2016 Schneider Electric SEs Transportation
Acquisition 23,0 0,2
2016 Knetik Acquisition 22,0 5,0 4,4
2017 MacroPoint Acquisition 107,0 12,5 8,5
2017 Data RPM Acquisition 30,0 9,8 3,1
2017 Comptel Acquisition 347,0 100,1 3,5
2018 Road Track Acquisition 96,7 1,2
Sources : Crunchbase, FactSet, Amadeus
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Appendix 3: The build-up of Ovinto’s financial plan
The financial plan presented in the Excel file provides limited financial information from the past 2
years (2017-2018), and the most realistic forecast for the five years to come (2019-2023) with some
simplified assumptions. The first Excel sheet provides a succinct overview of the EBITDA and the
cash flows. The plan focuses on the operational issues, as financial costs are limited, and Ovinto does
not pay any taxes given its past and expected losses. While EBITDA is expected to be positive from
2022 onwards, losses carried forward from the first years of operations will offset profits so that no
taxes will be due.
While the financial plan provides the most realistic scenario for Ovinto, the Excel sheets can be
edited to perform sensitivity analyses or develop alternative scenarios. Sheet 2 provides the colour
codes employed in the following sheets, so that it is clear what data can be changed.
- Yellow indicates a figure from the past (should not be changed)

- Blue indicates an assumption that can be changed; the formulas in the sheets will recalculate

EBITDA and cash flows accordingly
- Green fields are calculated based upon the assumptions and should not be changed
Sheet 3 provides the assumptions of the plan, Sheet 4 the revenue forecast and Sheet 5 the
expenses. For ease of calculation Sheet 6 provides the same information as in Appendices 1 and 2.
Revenue assumptions
This plan solely focuses on sales of the software platform, not of the sensors. All sensor sales will
therefore be on top of the forecasted revenues, but these sales are expected to be marginal. As
sensor revenues are not included, costs related to the sensors are also not included. Nevertheless,
inventory of the sensors needs to be pre-financed, as production typically occurs in batches. A bank
loan will be used to finance this inventory, but this is also is not included in the plan. It is expected
that the margins provided by selling the sensors will be sufficient to cover the financing costs. While
this represents a simplification of reality, it makes the build-up of the financial plan much more
straightforward, and it is considered that inclusion of the sensors would not provide significant
additional information or insights. Any additional profit and cash generated by the sensors would
therefore be a financial bonus.
It is expected that the average lead time between a first contact with a customer and the signing of a
contract will be 2 quarters (cell B3 – Assumptions sheet). For example, if a new salesperson started
in January 2020 their first sales would be expected in July 2020. The number of leads is driven by the
number of salespeople with each salesperson expected to handle 10 new leads per quarter (cell
B21).
- 50% of the sales leads (cell E4) are expected to sign up for a pilot. This will allow them to test
the software platform over 2 quarters (cell B4) while paying a fee of €1,000/month (cell D4).
- It is expected that 75% of the pilots will convert to real “Phase 1” customers, buying the
basic version of platform for €3,500/month. Pilots that do not convert to Phase 1 customers
are lost.
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- 75% of the Phase 1 customers will convert to Phase 2, signing up for a more advanced
version of the platform, which costs €15,000/month. Customers that do not convert to
Phase 2 are considered to be lost i.e. they will terminate their contract.9
- Half of the Phase 2 customers will convert to the “gold standard” of the platform in Phase 3,
after 4 quarters in Phase 2, leading to monthly payments of €30,000. The other half of Phase
2 customers will remain in Phase 2 forever.
Other revenues (see the Revenue sheet) are related to projects that have already been awarded
(Vlaio, ESA) and some new projects that should cover part of Ovinto’s future R&D expenses.
Assumptions on the expenses
The cost of goods sold (COGS) refers to direct costs related to revenues. As all revenues represent
sales of Ovinto’s software platform no direct costs are associated with additional sales. The COGS in
the financial plan refer solely to current costs related to servicing current customers. The costs

related to servicing new customers will be accounted for separately.

Fixed costs include the costs of housing, accounting, marketing expenses etc. and are estimated to
grow in line with revenues. Fixed costs currently equal 10% of revenues.
Current FTE is the full cost to the company of all currently employed staff. Since there is limited
inflation, it is expected that this cost will remain constant over time.
New managerial roles (New FTE) are expected to be recruited and they will increase the fixed cost
base of Ovinto as follows:
- A new CEO (Cell A15) will be employed from July 2019 (Cell D15) when the A-funding round
will have been completed and will represent a monthly cost to the company of €20,000. (Cell
E15). This recruitment will allow Frederick to fully focus on customer development.
- A new COO will also be employed from July 2019 and be responsible for all HR-related
matters.
- A pre-sales manager and a pre-sales administrative assistant from January 2020.
- An R&D manager focusing on ICT-related matters from July 2020.
Employees to support the sales process and conversion from pilots to Phase 1, Phase 2 and Phase 3
customers will also be needed.
- One salesperson, with a cost to the company of €10,000/month (Cell E21) will handle 10
leads per quarter (Cell B21).
9
This is a negative assumption. While some Phase 1 customers might remain in Phase 1, this would provide
some more upside potential.
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CASE 2019-04-C
- To convert pilots to Phase 1 customers, 1 on-boarder will be dedicated to 5 pilot customers.

This implies that 1 on-boarder will work for 1 pilot customer one day per week, helping them
to understand the possibilities of the platform, explore new features etc.
- A developer is also needed to tailor the platform to the needs of new pilot customers. It is
assumed that 1 developer will be able to service 5 pilot customers in parallel.
- In order to convert Phase 1 customers to Phase 2, and Phase 2 customers to Phase 3, a key
account consultant will be needed to be their direct contact person. One consultant will be
responsible for 10 customers.
- Finally, 1 developer will be assigned to 5 Phase 1 and 2 customers to further tailor the
platform to their needs, but also to add generic platform features.
There is therefore a direct link between the expected revenues and the FTE.
To support Ovinto’s expansion in the U.S. an in-country office will have to be opened, and this is

predicted for July 2020 (Cell D27) at a one-time cost of €400,000 (Cell E27). The running of the U.S.
office will additionally cost €10,000/month (Cell E28) and a U.S. manager will be hired, costing
€18,000/month (Cell E29).
Ovinto currently has €150,000 cash (Cell E32), and its working capital requirement will be zero (Cell
E33), as inventory is not accounted for in this plan. A monthly R&D cost of €16,667 (Cell E34) is
expected, but there are no capital expenditures (Cell E35).

Revenues sheet
Important note: each column represents a quarter, while the assumptions provide revenue (and
cost) estimates per month. Monthly revenues (and expenses) are converted to quarterly figures by
multiplying by three.
Project revenues are related to projects that have already been awarded (Vlaio, ESA) and some new,
not yet identified projects that should cover part of Ovinto’s future R&D expenses.
EBITDA and cash flow sheet
Remember that COGS solely refers to the cost of servicing the current customers, and is therefore
fixed.
12

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OVINTO: PREPARING FOR A SERIES A VENTURE CAPITAL

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Taught by Miguel Meuleman, from 1-Jun-2020 to 3-Jul-2020. Order ref F384072.

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Taught by Miguel Meuleman, from 1-Jun-2020 to 3-Jul-2020. Order ref F384072.

6. Designing a financing strategy to boost growth

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Taught by Miguel Meuleman, from 1-Jun-2020 to 3-Jul-2020. Order ref F384072.

risk at a time when Ovinto’s future was even more uncertain.

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

7. Additional material on YouTube

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Taught by Miguel Meuleman, from 1-Jun-2020 to 3-Jul-2020. Order ref F384072.

2. What valuation should Ovinto aim for?

3. Which type of investors would you target?

4. Who would you advise to target?

Series A Sales MEUR raised

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Appendix 2: Valuation of recent transactions

Valuation (MEUR) Sales (MEUR) EV/Sales EV/EBITDA

2012 Fleetmatics IPO 585,1 127,5 4,6

2012 ABAX Acquisition 3,6

Sources : Crunchbase, FactSet, Amadeus

Appendix 3: The build-up of Ovinto’s financial plan

- Yellow indicates a figure from the past (should not be changed)

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Taught by Miguel Meuleman, from 1-Jun-2020 to 3-Jul-2020. Order ref F384072.

Assumptions on the expenses

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Taught by Miguel Meuleman, from 1-Jun-2020 to 3-Jul-2020. Order ref F384072.

base of Ovinto as follows:

- A pre-sales manager and a pre-sales administrative assistant from January 2020.

- An R&D manager focusing on ICT-related matters from July 2020.

- To convert pilots to Phase 1 customers, 1 on-boarder will be dedicated to 5 pilot customers.

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expected, but there are no capital expenditures (Cell E35).

EBITDA and cash flow sheet

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