Financial Modeling For an Environmental, Social and Governance (ESG ) Startup Company- Case Study

Introduction

The Oak Business Consultant is a Financial and Business Consultancy offering Financial and Business Planning and Management Services to various industries. In this case study, we showcase our collaboration with a startup of Environmental, Social and Governance (ESG) company that approached us for help in creating a detailed financial model covering a period of 5 years and a Valuation Report. The aim was to provide the client with precise projections and valuable insights to aid their business planning and decision-making. 

Client Background 

Our client is located in the United Kingdom (UK); the Environmental, Social and Governance (ESG) Space company was in its very early stages and was pitching to investors. They have multiple revenue streams and categories to offer start-ups, SMEs, and large corporation companies with different pricing packages per the requirements. Several companies are increasingly looking to incorporate sustainable practices into their operations. 

Business Objective

The client’s objective is to provide environmental, social and governance services to organizations globally. They required investment to establish the business cycle and their operations and bear the start-up cost. Moreover, the company helps companies develop and implement effective ESG strategies that align with their business goals while reducing their environmental footprint and promoting social responsibility. 

Furthermore, our client offers the following revenue streams; 

• Software as a service (SaaS)
• Private membership club
• Advertisement 
• Satellite design software integration 

Technical Complexity/Challenges

Revenue Stream

The multiple revenue streams of our client created complexity because it has 3rd party involvement, subscription plans, and other revenue streams which need to be incorporated into the revenue model and the financial statements. Furthermore, we were required to evaluate the CLV/CAC ratio and incorporate it into the financial model

 to show the company is generating significant revenue from its customers. 

Market Size

Our client wanted us to estimate the market size for their services. They wanted to serve their services globally; therefore, our expert team was required to evaluate the Total Addressable Market, Serviceable Addressable Market, and Serviceable Obtainable Market. 

Valuation Report 

The valuation report required mention of the detail of the business model of our client, their competitor analysis, pricing strategy, and market & industry analysis with deep analysis and interpretation of the estimated data. 

Solution

Our experts estimated revenue projections for the next 5 years, in which we have mentioned about client’s % of commission, memberships, and software integration charges. Furthermore, our expert team has implemented advanced logical formals to estimate the actual and realistic revenue monthly and yearly. Our client provided us with the prices of their services, and our expert estimated the revenue analysis. In addition, the model is dynamic and user-friendly, where user can change their assumptions, and the model will update automatically and present the data. 

Our experts extensively researched the market size for our client’s services. It includes the Total Addressable Market (TAM), Serviceable Addressable Market (SAM), and Serviceable Obtainable Market (SOM). The market validation analysis helps to estimate the realistic and actual market sizes of their targeted market.

The valuation report plays an important role in analyzing the different components of the overall business. Thus, our expert team prepared a valuation report for our client and included competitor analysis, pricing strategy, and market & industry analysis with deep analysis and interpretation of the estimated data. Furthermore, it helps our client compare their business model with their competitors and analyze the market share, size, and financial projections. 

Results

Our financial model allowed clients to predict the financial performance of their  Environmental, Social and Governance startup for the upcoming five years. The model encompassed revenue, expense, cash flow projections, and sensitivity analysis to evaluate the effects of different factors on their financial performance. Furthermore, the breakeven, financial ratios, cash utilization of funds, and equity table helped our clients to attract investors and analyze their financial projections. 

In addition, the model is dynamic and user-friendly, where user can change their assumptions, and the model will update automatically and present the data. The investor was impressed by accurate projections, facilitating funding for our client from investors. Additionally, the model provided our clients with a clear comprehension of their financial position, empowering them to formulate effective financial strategies and make informed decisions for the future. The subsequent section illustrates the financial statements and future projections.

Financial Highlights

Input Sheet 

The below input assumption sheet helped and allowed our client to change their assumptions in highlighted cells, and the model will be updated automatically. Furthermore, the user-friendly and dynamic financial model fulfilled our client’s requirements per their projection requirements. 

Revenue Projection

Our expert team incorporated advanced formulas to make the model dynamic and user-friendly, which helped our client to generate revenue projections for 5 years. The client has multiple revenue streams with complex commission and subscription packages. Thus, we developed the model for our client’s ease. The revenue projection can be seen in the below image.     

Income Statement

The profit and loss statement plays an important role in financial projections. It shows revenue, operating expenditures and profits of a specific year. Our expert team developed a profit and loss statement on a monthly and yearly basis where our clients are able to compare and analyze each year’s performance and their profits.

Cash Flow Statement

The Cash Flow Statement is also one of the key reports in financial projection; it shows the inflows and outflows of cash in your business. The user can view their performance on a monthly and yearly basis which helps to make projections more efficient and per our client’s requirements. All the components of the Cash flow statement are mentioned in the model, which includes; Financing, Operating and Investing activities and net cash.   

Balance Sheet Statement

Balance Sheet Statement can check The financial position of the company. It contains the assets, liability, and equity of the company. Our expert team developed the statement with advanced formulas, which helped our client analyze their financial position efficiently and make financial decisions. Furthermore, the user-friendly and dynamic model will update automatically if any make changes in the assumptions sheet.    

Financial Ratios

The financial ratios are very useful to check the performance and financial condition of the company. We evaluated the financial ratios for our client in which we calculated the most relevant ratios to check the company’s financial condition on profitability, equity, return on assets, EBITDA margin, and Net profit growth.

Project Evaluation

Our experts prepared the project evaluation, including the key components to attract investors. We estimated the present value of the company, terminal value, Internal Rate Of Return (IRR) – Terminal, Minimum Expected Equity Percentage by Investors, and payback period for 5 years. The project evaluation can be seen in the below image.

Valuation Report

Our client required the valuation report, which includes the overall business, financial and market analysis. Our expert efficiently prepared the documents and presented the data in a well-manner and visual way. It helped our client to share the document with their stakeholders, shareholders and for internal company purposes. Some of the valuation report sections can be seen in the below images.

Conclusion

Oak Business Consultant takes pride in assisting our client in developing an environmental, social, and governance (ESG) start-up financial model tailored to their ESG-based services. Our Environmental, Social and Governance(ESG) financial model reflects a thorough understanding of our client’s financial standing, empowering them to make strategic and informed decisions for their business. Continuing to grow their business and achieve their objectives, we remain dedicated to providing steadfast support.

At Oak Business Consultant, we excel at helping businesses stand out and achieve exceptional performance. Our approach involves in-depth market research and accurate financial forecasting. Additionally, we consider every aspect of our client’s company, offering them a critical perspective to navigate their journey toward business success.

What Oak Business Consultant Offers?

At Oak Business Consultant, we, as professional and proficient financial and business analysts, dedicate ourselves to supporting your financial planning endeavors. We take pride in offering exceptional financial services to all business owners.

Our diverse services include Financial Modeling, Business Plans, Pitch Decks, and more. Additionally, we possess the expertise to assist you in fundraising and developing a comprehensive business plan. Our business plans incorporate strategies to target the right market and foster sustainable growth. With our financial models, you can forecast future financials and seamlessly integrate them with your models. Some of the templates can be seen by clicking on the following links; 

• Fintech Financial Model with Cohort Analysis
• AI Virtual Assistant Excel Financial Model
• Multichannel E-Commerce Excel Financial Model Template
• Venture Capital Excel Financial Model Template
• Cryptocurrency Excel Spreadsheet Template
• Blockchain Network Excel Financial Model

You can optimize your business operations by choosing us for your financial services. If you face challenges in launching your business, contact us for comprehensive support. Explore our portfolio to discover why numerous Micro-Small and Mid-sized Businesses consistently prefer our financial planning services. Once you embark on this journey with us, we assure you that success will be the only direction ahead.