Ghent University

Faculty of Economics and Business Administration

GenAppeal Business
Plan
DELIVERABLE 1: DUE DILIGENCE REPORT

Made by Group 27: Mentor:

 Stefan Solev  Professor: Mirjam Knockaert
 Georgi Dimitrov  Assistant: Karlien Coppens
 Beste Dağlı
 Business Our assessment Our changes Financial translation of our changes
plan
element
- The original business - We have decided to add two new - Adding services in our business plan will
plan only offered one services. The first service is one mean adding revenues. The analysis of the
service (genetic where expecting parents can give baby’s potential genetic characteristics we
matching of couples). us their genetic information which would price at 60€. Since we could not find
For us this is we can then use to predict the data on how many women get pregnant
something that limits probability that the child will have every year in the Benelux, we’ve used the
profits to a one-time certain characteristics. data for the USA for our standard. Since
subscription to our - The second service we’ve decided around 3,4% of women get pregnant each
service, and must, to offer is based on the fact that year in the USA, and considering that the
therefore, be fixed by couples with different DNA’s are fertility rate in the Benelux is about the same
adding other services. more fertile and more likely to have as that of the USA, we estimate that around
success in in vitro operations. 3,4% of the women in the Benelux will get
Because of this, we believe we can pregnant each year, which means that
offer couples where the man is around 500 000 women in the Benelux are
infertile, or single mothers, the pregnant each year and are a potential
option to use our site as a way to customer. If we assume that we shall attract
find and choose a genetically 0,75% of this number for our service (3 750),
dissimilar male to be the donor for that means we shall annually get 225 000€
the in vitro, should he agree, of the first two years. In year 3 we expand to
course. We could also close deals Germany and France, which also have similar
1. Product with certain in vitro clinics, and fertility ratios. Doing the math, we predict a
and offer consumers that use our total income of around 1 260 000€ for this
appropr service to find a donor, a certain service in year 3. In year 4, because of our
iability discount in those specific clinics, addition of Britain, we predict the total
for both the procedure, and for income to be 1 770 000€ for this service.
counseling and check-ups during - The matching with an in-vitro donor would of
pregnancy. This will be beneficial course mean revenue as well, but part of the
for both us and the in-vitro clinics price the customer pays would have to be a
who close the deal with us, bonus which will incite the donor to donate.
because we’ll attract more We suppose that a price of 150€ to
customers with the promised genetically match her and contact the donors
discount, while they also get more is reasonable, with the price dropping to 100€
customers because people who use if the woman or couple looking for a donor
our services will naturally want to have already been our customers (i.e. if we
use our discount. Because of this, already have their genetic material). Out of
we believe that the agreement will this sum, 30€ would go to the donor, as both
be bilaterally signed and accepted a reward, and a way to incite the donor to
by both us and the in vitro clinics, donate. In the Benelux, there are around 19
without causing neither side any 000 women going in for in vitro fertilization
expenses. every year. Since we offer a discount with in
- 886 repeat from ger and fr vitro clinics, higher chances of fertilization,
- 276 repeat from Belgium and finding a partner, we expect to attract 2%
- 230 new from Belgium of this number, which in the first year will all
- 738 new from ger and fr be first time customers. This means an

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- We have detected a - We suggest that our company -
problem with the should do the genetic matching
value chain in the fact automatically, and provide
that it wants customers with an already selected
consumers to do too list of genetically dissimilar
much themselves. potential partners. Not only does
This is a problem for this add value to our services, it
us, since we do not also provides us with an
believe that a opportunity to offer a premium
consumer that has service, which will be the chance
already paid a hefty for consumers to do multi-
2. Value
price for our service, parameter searching (ex. By hair
chain would want to do the color, general height, nationality,
matching themselves. etc.).
- We also suggest another small,
quality of life change, and that is to
remove salary as a search
parameter, as we believe this goes
against our image as a company
working for love.
- For Genappeal to take - One measure that will help us -
off successfully it is attract consumers is the
imperative that the aforementioned automatic
3. Busines
company amasses as matching.
s model large a consumer - Another we could take to
base as fast as popularize ourselves is to have an -
possible. Therefore, app in the Android Play Store, and
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income of 57 000€. The second year, we
expect that around 2,75% of those looking for
in vitro would be our customers. But out of
that percentage, we estimate that around
1,5% will be repeat customers, and 1,25%
would be new customers. This means that we
expect a total income of around 64 200€. We
expect that the same conditions, and
therefore same revenue in the Benelux would
persist for the remaining 2 years. The third
year, when we expand to France and
Germany, we expect to also attract 2% of the
respective in vitro applicants in those
countries, which would be all first-time
customers, which along with the Benelux
income in year 3 would amount to 241 200€.
The fourth year, after our expansion into the
UK, we will earn a total income of 310 000€.
The automatic genetic matching will of
course require a computer expert to program
the whole system to work automatically. In
the Team part of this analysis, we’ve
mentioned that hiring such an expert is
inevitable, both for the initial development,
and for the functioning of our company later
on. Based on her competences, we believe
that Lisa Garfield would be the better person
for our job. Our starting position on her pay
check would be 3000€ per month, and we
are, of course, prepared to go higher to hire
this web master.
- The premium users will have to pay a higher
price in order to get the premium features,
i.e. 160 instead of 145€. We expect that the
convenience we offer will entice around 20%
of our customers. From this estimate, and
since, as we explain later, we expect 21 362
customers, we can expect 4 272 users to pay
the premium price, and the other 17 090 to
pay the regular one. This would amount to an
income of 3 161 570€ the first year.
In order to make the app, we would have to
hire an app developer, to build, maintain and
update our app. We would be paying him the
average pay for an app developer in Belgium,
which is 3 000€ per month.
If we consider the price increase, we must
take into account that the sales shall naturally
 we believe measures the iOS App Store. In the modern decrease, at least in the first year. If we take
should be taken in world where smartphones have into account that we, in our financial
order to achieve this. become a necessary and planning, consider that the 1% sales planned
- Another problem we indispensable part of our lives, we are overestimated and the percentage of
have detected with believe that an app would not only singles we reach will be 0,6%, mostly because
GenAppeal’s original help us popularize our product, but today there are companies like Pheramor or
business plan was the add convenience to consumers. Genepartner, who offer similar, but not
price, which for us - Since GenAppeal has no repeat identical services (they offer gene matching
was unrealistic, customers from its main business of similar genes, while we offer matching
considering that the activity, we feel that a price based on dissimilar genes). Therefore, we
people using our increase, namely from 125€ to think that we should account that, in the
services pay for them 145€ is unfortunately, necessary. realistic scenario, after the price increase, we
only once. We do not This is necessary according to us will have gained 0,55% of the singles, or 21
think that this is a because our customers can never 362 people as customers. In comparison to
sustainable business be repeat customers (i.e. they only the 23 304 (0,6% of the singles) we expected
model, even though pay once for our services) except of previously, we can expect an increase in
naturally, there will course for those who wish to use income of 197 305€ during the first year (23
always be new the other two services we have 304*125 = 2 913 000€ as opposed to the new
generations coming suggested to offer). This price 21 362*145 = 3 110 305€). This increase in
off age which will use increase is also small and shouldn’t income is furthered by our addition of a
our products. The two affect sales too much, while also premium service, which as we previously
new services we being justified by the fact that, stated, would be bought by 20% of our
added help with this according to our changes, we now customers, but slightly decreased by 10%
problem, but we also offer added value for consumers youth discount users. Taking all this into
feel that the price because of our automatic matching account that means that, in total around 2%
needs to be changed. and app. Our most immediate of our users are youth premium users, 8% are
- Since security is so competition charges much higher youth discount users, 18% are premium
important for both us prices (starting at 190€), so we users, and 72% are regular users. So, our total
and the customers, believe the price increase shouldn’t income in the first year would be 3 110 305€.
we don’t feel that the destroy our competitive advantage If we advertise on Facebook instead of Yahoo,
original business plan either. then we can spend the same amount of
offered enough in this - We also suggest another slight money we did on Yahoo, on Facebook, as
area. That’s why we change in our marketing approach, Facebook offers companies the option to set
have added measures namely, instead of online a financial limit. This would allow us to spend
to hopefully make marketing in sites like Yahoo, which the same amount of money on more reach.
both us and the are no longer as popular, and - The offices we open will require a lot of
customers instead online advertise on sites money, however not so much as was
comfortable while like Facebook and Twitter. supposed in the original business plan, where
using our services. - Another change we feel is the planned 3 external offices costed 800
- Another problem we necessary is the opening of our 000€ together. We believe that this cost is
noticed with the own offices. We feel that, while vastly overestimated, and we predict that a
original business plan perhaps inconvenient, this step is small 8m2 office (which we’re certain is
is that it predicts necessary because it offers security enough for their purpose) in these cities will,
buying lab machinery for the customers (a customer per year, cost:
and equipment in must extract his genetic material in  Brussels - 2 400€
quarters 4, 8, 10 and person, and therefore cannot send  Ghent – 1 200€
14. We require the in someone else’s genetic  Antwerp – 1 120€
lab for our genetic material), and legal security for us  Liege – 1 020€

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 analysis immediately, (for while there they must sign a  Amsterdam – 3 120€
and we need one for legal document authorizing our use  Rotterdam -1 640€
every country we of their genetic material). Thus we  The Hague – 1 440€
expand into. shall also employ the “know your  Utrecht – 1 240€
- The original customer” principle.  Luxembourg – 4 320€
GenAppeal business - Instead of buying laboratories in This amounts to 17 500€ for rent for the 9
plan wanted to store the originally planned quarters, we cities in the Benelux where we’ll have offices
and keep data locally. buy we but the first one in year 1, during the first two years. Later on, in year 3,
We plan on using located in the Benelux. The second we shall expand to France and Germany, and
Google’s cloud and third will be opened in year 3, in year 4, to Great Britain. We predict opening
storage, which means one in Germany and the other in 7 offices in Germany, which would amount to
we can cut those France. By the same logic, the 4th 16 800€ , and 7 offices in France, would mean
expenses. lab would be opened in the UK in about 15 680€ per year for our French offices.
- The original business year 4. In year 4, in Britain, we open five offices in
plan wanted a web- - Since we’ll have offices and five cities, which by our calculations will
page redesign in laboratories, we’ll also require amount to about 10 400€. All this means that
quarter 3 and 7, transportation services to for our offices, we will be spending 17 500€ in
which we believe is transport the material from the the first 2 years, the third year we will spend
unnecessary. On the offices to the laboratory. 49 980€, and 60 380€ in the fourth year. We’ll
other hand, keeping - To further our security efforts, we also need to spend money on heating and
our mobile app also suggest keeping our data in electricity for the offices. Considering the
constantly updated, is the Google Cloud, which is a secure prices are 132€ for all utilities for an 85m2
necessary. cloud storage system used by apartment, we estimate that one office will
companies all around the world. cost us about 70€. This means we will have to
- Another measure we feel is spend 630€ per year the first two years, 1
necessary for the security of the 610€ the third year, and 1 960€ the fourth. Of
genetic material, is to incinerate course we shall also need a small central
the materials after they are building for our company, where the
analyzed. To do this, we must have managerial team, the accountant, the
an incinerator in every laboratory. administration etc. will be placed. This will
- Because we decided to use cost us around 1 500€ a month, or 18 000€
Google’s cloud for secure data per year.
storage, we can remove the costs - Whilst estimating the cost for the labs, we
for storage and servers and replace deduced that the equipment cost for the labs
them with the aforementioned is overestimated and can be reduced to 50
costs for Google cloud storage. 000 euros per laboratory, but the equipment
- Instead of investing money into is also required for every lab, not just for two
web-page redesign, we must invest of them. Taking this into account, we can
money into keeping our mobile app estimate a cost of 250 000€ for a lab and
constantly updated. The only web- equipment in year 1 in the Benelux, 500 000€
page redesign we’ll need is when in year 3, for the two labs in France and
we add Germany, France, and the Germany, and another 250 000€ in year 4 in
UK into the system, which we can the UK. The incinerators we mentioned are
all group up in year 3 for simplicity. also covered in the lab equipment costs.
Keeping the app updated won’t - To transport the genetic material from the
cost us additional money, as we offices to the labs, we shall have to pay a
have an app developer as a full transportation company for their services.
time employee.

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 We believe that all in all, the transportation
services will cost us about 2000€ on average
per month, leading to a total cost of about 24
000€ per year, on average.
- The price of Google Cloud storage is 0,02€ per
GB of data per month. Considering we’ll have
25 492 customers (in vitro and baby
characteristics included), by our estimates,
and estimating we require about 100 MB of
data per customer, it turns out we need
about 2 490 GB of data. This means that we
will have to pay Google 596€ for their services
the first year. The second year, since we
estimate 50 599 customers, we will need
about 1 186€. The third year, as per
estimated 281 444 customers, we will have to
pay 6 596€, and the fourth year, we’ll have to
pay Google around 9 964€ for our 425 115
customers.
- Since we shall be using Google’s Cloud
storage, the server/storage expenses only
involve the price we pay Google for the use
of their software. Therefore, we deleted the
other server and storage costs.
- We will remove the investments for Website
part 2 and instead we will just build the
official website in quarter 1 for 10 000 euro.
In quarter 8 we will make additions to the
website as well as redesign which will cost us
3 000 euro. The initial 40 000 euro for the
website are now lowered to 13 000. We will
use 12 000 euro more to build our phone
and desktop app.
- Market analysis - We suggest offering young - The discount will mean that while we attract
showed that young consumers (18-25) a discount, as more young people to our service, we shall
customers are less they also are usually the also make less income per customer. As per
inclined to pay for our innovators and early adopters of the statistics in the business plan, 40% of 25
services than older new technologies. For these year-old men are single, and we can surmise
people, so we need to young people, the discounted around the same percentage for the whole
do something to price will be 120€, instead of the age group of 18-25 year-old men. For women,
4. Market attract this age group standard 145€. For young the percentage is smaller, at 25%.
to our company. premium users, the price will be Considering that almost 10% of the
- We also feel that our 140, instead of 160€. population of Belgium is in this age group,
expansion plan is a bit - Because we do not believe that and assuming that the gender proportion is
over-optimistic. We we can expand as fast as was 50-50, that means a potential market of 370
simply do not believe predicted in the original business 000 youth customers. Taking into account
that our start-up will be plan, we’ve decided that it would that we reach 0,5% of these singles before
successful enough to be best for GenAppeal if, in the the price discount, that would mean a

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 be able to expand to first two years, it operates only in revenue of 268 250€ from this age group. But,
most of the EU by year the Benelux. By year 3, we believe taking into account that, with the discount we
3. that we will have made a name for would attract customers, and, by our
- There is a danger that a ourselves, and therefore will be estimates reach 0,7% of this group (i.e. 2072
new company may able to expand into France and youth discount users, and 518 youth
enter our market, Germany, which shouldn’t be very premium users), now we would make 321
usurp our unique hard as our services are already 160€, meaning that all in all, we would gain
position and take some offered in French and German. In 50 875€ more with this discount.
of our potential year 4, we can then expand to - The change in expansion plans affects almost
customers. Therefore, another large market, namely the every revenue, and quite a few of the
measures need to be UK, although we plan to only be expenses in the financial plan. Each
taken to prevent this present in 5 cities in the UK in the respective parameter that was changed
from happening. first year. because of our new expansion plans is
- We find that in the - In order not to lose our first- mentioned in the specific area where we
modern world, comer advantage to the market of speak of these parameters. In order not to
standard publicity genetic dissimilar pairing of repeat ourselves, we do not offer these
requires less focus, as singles, we must provide calculations here again.
compared to other, ourselves a patent for our service. - A European patent costs, on average 5 710€,
more far reaching - In bringing the GenAppeal which is a cost that we shall have to cover in
channels, like digital business plan into 2018, we have our first year of operations, even before we
marketing. decided to divert some of the open our offices and web-site.
expenses originally planned on - To better use our advertising money, we have
publicity to digital marketing and decided to spend 3 000€ instead of 15 000€
social media shout-outs. on publicity, and reroute 6 000€ into digital
advertising, and 1 000€ on social media
shout-outs. This will also mean a reduction in
overall advertising costs which, although
unfortunate, is, sadly, something we felt was
necessary given the other financially
demanding changes we’ve already made to
the business plan. These costs will remain
unchanged even later on, when we become
more profitable, because we believe that our
main advertising will come from word-of-
mouth from satisfied customers.
- Another problem we - Of course, because we have - Considering the office staff requires no
detected with the offices, we also have to have staff special education or experience, we suppose
original business plan in them. We only really require that paying them 1 650€ per month would be
was the fact that it one employee per office, working enough. Also taking into account that we only
hadn’t predicted any from 9-17h. need one employee per office working from
employees for our - We also need a computer expert, 9-17h, we arrive to our total costs per year for
5. Team company. The team of to set up our automatic analysis all office employees. For the first two years,
entrepreneurs doing system, and after that to monitor since we have 9 offices, we’ll spend 14 850€.
all the work for us, the data in order to keep it secure. The third year, as we shall open 14 more
seems impossible. - We also suggest hiring two offices in France and Germany, we’ll have to
That’s is why we felt network administrators, which spend 37 950€. The fourth year, because of
the need to add other will monitor the data along with our five new offices in the UK, our office
the computer expert. These employees will cost us 46 200€. However, we

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 employees to three, monitoring the data 8 also take into account the fact that total
GenAppeal. hours a day, will mean that our personnel cost per month is around 1,6 times
- We found out that the data is securely monitored 24/7. larger than the monthly pay check for the
information that the In year 3, we will employ a third employees in Belgium, and is very similar in
total personnel costs network administrator, who will the other countries where we shall be
today are 1.6 times the monitor the data instead of the present in our first 4 years. Therefore, our
monthly pay check, computer expert, who will then total personnel cost will be around 23 760€ in
not 1.35 as in the work on our systems full time. year 1 and 2, 60 720€ in year 3 and 73 920€
original business plan, This will also allow us to meet the in year 4.
at least in 2018. new General Data Protection - In general, we will change the Rate of the cost
- The original plan didn’t Regulation (GDPR) standard that of an employee in the formula for “Cost per
predict hiring an the EU will introduce this year, as month” from 1,35 to 1,6.
accountant, which we we will have protected our data - We predict hiring an accountant from year 1,
feel is a necessity in with 24/7 administrator which means that we’ll have to pay him or her
any company. monitoring. 3 000€ a month, an average accountant’s
- We also need a brand - An accountant must be hired to salary. We shall have to increase this number
new CEO, not a keep track of our incomes and later on, because we will have more need of
technical person, but expenses. these professionals as we expand. This is we
someone who can - We also suggest changes in the shall have to hire another accountant in year
skyrocket our managerial team. We feel that 3, and one more in year 4.
company and its Luc, the technology expert should - The two network administrators will cost us
image, while also only be our CTO, not CEO. For a 36 500€ per person, per year. The computer
closing deals with CEO, we shall need to hire a new expert, as previously stated, will cost us 48
potential partners, and manager, someone with a degree 000€ per year.
keeping the company in economics or management, - Considering we need a CEO well versed in
operating at top preferably with prior experience both marketing and psychology, and
performance whilst in inter-company arrangements especially someone that can reach out to and
as he shall need to close deals make deals with potential business partners
with the marriage agencies and (like in vitro clinics and marriage agencies),
in-vitro clinics. He will also have to we believe that Marnix Fielding is the best
be a charismatic person who will candidate for the position. Our starting
become the face of our company position on his pay check will be 4 000€, but
in order to better attract we are of course, prepared to offer more to
consumers. We feel that such a get him on our team.
person is necessary for the
continued success of our
company.
- We believe that the - Because the sales figures are, at - Taking into account the number of
sales figures in the least according to us, customers we now expect, we can estimate
realistic financial plan overestimated, it is necessary that out total earnings from our primary service,
are overestimated. we reduce them. Therefore, in the if we consider that 20% of our customers
For, although our first year, and after the would be premium users, and that 20% are
6. Financi
company possesses aforementioned price increase youth users with a discount, we can
al plan relative advantage (i.e. which further reduces the number calculate our income. If we apply the same
it brings a unique of expected customers, we now proportion of premium users to youth users,
product to the table), it expect 0,58% of the singles in as in adult users, we estimate we’ll have
is also complex, cannot Benelux to become our around 2% youth premium users, 8% youth
be tried before buying customers, or 21 362. The second discount users, 18% premium adult users,

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 and may be off-putting year we expect to reach another and 72% regular adult users. All this mean
to customers who 1.2% of the total singles in that in year 1, we estimate we’ll have, as we
value the security of Benelux, or 45 934 people. The said, 3 110 305€ of income. In year 2, we
personal information, third year, we shall have estimate an income of 6 786 560€. Per our
especially because expanded into France and calculations, in year 3 we’ll have 37 714 195€
they’re giving us their Germany, where we expect to in income, and in year 4, 57 418 210€.
DNA, even though attract 1% of the singles in the first - The new wage indexing gap we used is
we’ve taken extensive year, (a bit better than our start in 1,83%, as opposed to the original 0,5%.
measures to assure the Benelux, as we hope to have - As a result of the patent, our formation
their security. The made a bit of an image for expenses are now 5 710€.
ethical implications of ourselves by year 3). This means - To motivate and reward employees, we
a company using we should attract 209 264 singles have decided to change the bonus from year
people’s DNA can be from those countries as our 3 onward from 0,15 to 0,30%.
quite off-putting to customers. These customers,
customers, especially along with the 49 762 people
after sci-fi shows like (1.3% of the singles) we hope to
Black Mirror further gain in the Benelux in year
popularized their 3, will amount to 259 026
potential misuse. Also, customers in that year. In year 4,
as we mentioned we expect to have 53 590 (1,4%)
before, there are other customers from the Benelux, 272
genetic matching 043 (1.3%) from France and
companies, based on Germany and 68 731, or the
different principles initially planned 0.9% in Great
from ours, that could Britain, where we expect a bit of a
potentially take some colder response by the population
of our customers, because of the slight difference in
though we also have mentality. This will amount to a
the advantage of total number of 394 364
having lesser prices customers in year 4.
(Genepartner for ex. - As the wage indexation index has
charges around 200€). changed from the time the
- We have updated the original GenAppeal business plan
wage indexing was formulated, we have updated
percentage to the one the percentage.
in 2018. - The prices for the patent, firewall
- Adding a patent and and software must be added to
the firewall and intangible fixed assets.
software means there - We feel that an increase in
are intangible fixed bonuses from year 3 onwards,
assets. after our expansion will be a good
- The bonus percentage measure to motivate employees,
of the turnover for all and increase employee
years remains the engagement and identification
same, which, for us, is with our company, which is of
unreasonable with our course important for better
planned growth rate. customer experience.

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 BALANCE SHEET Year 1 Year 2 Year 3 Year 4
ASSETS
Formation expenses 0 0 0 0
Intangible fixed assets 15,710 15,710 15,710 15,710
Tangible fixed assets 220,136 660,978 696,890 504,754
Accounts receivable 384,460 583,783 3,244,565 4,908,149
Cash 405,727 2,069,037 18,692,181 46,696,806
Total assets 1,026,033 3,329,509 22,649,345 52,125,419

EQUITY AND LIABILITIES

Capital 50,000 50,000 50,000 50,000
Capital subsidies 0 0 0 0
Reserves 0 0 0 0
Accumulated P/L 784,128 3,012,863 21,365,909 50,252,522
Debts payable after 1 year 0 0 0 0
Debts payable within 1 year 0 0 0 0
Accounts payable 191,904 266,646 1,233,436 1,822,897
Negative treasury 0 0 0 0
Total equity and liabilities 1,026,033 3,329,509 22,649,345 52,125,419

P&L STATEMENT Year 1 Year 2 Year 3 Year 4

GenAppeal - product 1 2,230,245 4,866,200 27,042,355 41,164,630
GenAppeal Youth - product 2 205,080 447,480 2,486,640 3,791,640
GenAppeal Premium - product 3 615,200 1,342,400 7,460,000 11,357,760
GenAppeal Youth Premium - product 4 59,780 130,480 725,200 1,104,180
In Vitro - product 5 57,000 35,700 212,700 187,650
In Vitro Premium - product 6 0 28,500 28,500 58,200
Analysis - baby potential characteristics 225,000 225,000 1,260,000 1,770,000
Turnover 3,392,305 7,075,760 39,215,395 59,434,060
- Direct , variable costs 648,700 1,280,665 7,087,190 10,682,865
Gross margin 2,743,605 5,795,095 32,128,205 48,751,195
Formation expenses 0 0 0 0
Services rendered by third parties 64,000 100,980 103,000 105,060
Infrastructure and operational costs 94,197 96,658 103,978 102,926
Marketing 144,000 146,880 149,818 152,814
- Services and other goods 302,197 344,518 356,795 360,799
- Renumerations and other social costs 1,146,060 1,924,849 3,658,935 4,337,325
- Depreciations 107,274 148,858 304,829 285,476
- Provisions 0 0 0 0
- Others 0 0 0 0
Operational result 1,188,073 3,376,870 27,807,646 43,767,595
Financial result 0 0 0 0
Exceptional result 0 0 0 0
Result before taxes 1,188,073 3,376,870 27,807,646 43,767,595
Taxes 403,945 1,148,136 9,454,600 14,880,982
Result after taxes 784,128 2,228,734 18,353,046 28,886,613

TREASURY POSITION Year 1 Year 2 Year 3 Year 4

Operational result 1,188,073 3,376,870 27,807,646 43,767,595
+ Depreciations 107,274 148,858 304,829 285,476
- Change in working capital need -192,555 -124,582 -1,693,992 -1,074,124
Cash Flow from operations 1,102,792 3,401,146 26,418,483 42,978,947
- Reimbursments 0 0 0 0
- Interests 0 0 0 0
- Investments -337,410 -589,700 -340,740 -93,340
- Taxes -403,945 -1,148,136 -9,454,600 -14,880,982
+ Capital raised 50,000 0 0 0
+ Capital subsidies 0 0 0 0
+ Financing 0 0 0 0
Cash Flow 411,437 1,663,310 16,623,144 28,004,625
Treasury position 411,437 2,074,747 18,697,891 46,702,516

OTHER FACTS
Working capital need 818,418 3,047,153 21,400,199 50,286,812
Change in working capital need 192,555 317,137 2,011,129 3,085,252

Graphics
year 1 year 2 year 3 year 4
GenAppeal - product 1 2,230,245 4,866,200 27,042,355 41,164,630
GenAppeal Youth - product 2 205,080 447,480 2,486,640 3,791,640
GenAppeal Premium - product 3 615,200 1,342,400 7,460,000 11,357,760
GenAppeal Youth Premium - product 4 59,780 130,480 725,200 1,104,180
In Vitro - product 5 57,000 35,700 212,700 187,650
In Vitro Premium - product 6 0 28,500 28,500 58,200
Analysis - baby potential characteristics 225,000 225,000 1,260,000 1,770,000
year 1 year 2 year 3 year 4
Formation expenses 0 0 0 0
9 | Services
P a g e rendered by third parties 64,000 100,980 103,000 105,060
Infrastructure and operational costs 94,197 96,658 103,978 102,926
Marketing 144,000 146,880 149,818 152,814
Renumerations and other social costs 1,146,060 1,924,849 3,658,935 4,337,325
- Depreciations 107,274 148,858 304,829 285,476
 Company valuation and financing

To estimate the value of our company, we used the DCF – valuation method. In order to calculate the
pre-money value, first we need the WACC:
𝐸 𝐷
𝑊𝐴𝐶𝐶 = × 𝑅𝑒 + × 𝑅𝑑 × (1 − 𝑇𝑐)
𝐸+𝐷 𝐸+𝐷
Our company is not predicted to have any debt, which means that the whole second part of this
equation is 0, and that the proportion of financing that is equity (E/E+D) is 1. All this means that our
WACC depends only on our cost of equity (Re). Now the cost of equity is:
𝑅𝑒 = 𝑟𝑓 + (𝑟𝑚 − 𝑟𝑓 ) × 𝛽

The risk free rate (rf) of Belgium is 0,68%. The market risk premium in Belgium is 5,78%, and the
unlevered β is 0,98. Taking all this into account, we arrive to the conclusion that our cost of equity,
and therefore our WACC equals about 6,34%. Now we can calculate our pre-money company
valuation, which equals:
𝑛
𝐶𝐹𝑡 𝑇𝑉𝑛
𝑉𝑎𝑙𝑢𝑒 = ∑ 𝑡
+
(1 + 𝑟) (1 + 𝑟)𝑛
𝑡=1

To do this, we need to estimate our company’s terminal value. Before we do, we need the Free Cash
Flow in the final year (year 4) which is the result after taxes plus depreciation minus change in net
working capital and minus capital expenditure. In our case, this would be 43 767 595 (1-0.34) + 285
467 -1 074 123 – 1 127 710, which equals 26 079 837. From there the terminal value is:
𝐹𝐶𝐹𝑡 (1 + 𝑔) 26 079 837 × (1 + 0.018)
𝑇𝑉 = = = 584 785 772
(𝑊𝐴𝐶𝐶 − 𝑔) (0.0634 − 0.018)

All this means that the company’s pre-money valuation is:

398 137 1 507 455 16 379 746 26 079 837 584 785 772
𝑉𝑎𝑙𝑢𝑒 = + 2
+ 3
+ 4
+ =
(1 + 0.0634) (1 + 0.0634) (1 + 0.0634) (1 + 0.0634) (1 + 0.0634)4

= 365 937 + 1 333 064 + 13 621 257 + 20 394 744 + 457 309 448 = 493 024 450

Now that we have the pre money valuation, we can estimate GenAppeal’s post-money valuation.
Considering we need 310 000€ of financing to start our business, and that we shall get 50 000€ from
our own funds, plus funds we can borrow from friends and family, that means that our total equity
financing will need to be 260 000€. From here, our post-money valuation will be 493 024 450 + 260
000 = 493 284 450€, meaning that we would offer our financier 0,053% of the total shares.

We have decided in favor of equity financing, as opposed to a bank loan, since we do not believe that
a small and risky start-up company such as ours, with little to nothing to offer in terms of collateral,
would even stand a chance of getting a bank loan. However, we hope that the profits we have
estimated we’ll generate in subsequent years will entice potential business angels, investors and
financiers.

10 | P a g e