Wash Out Must Wash 116,000 Cars per Month For Its €5M Valuation

Italian startup Wash Out washes cars for car owners for an average of €21.90 per washing (including VAT, complete washing medium car).

EconomyUp reports that Wash Out just raised €1 million from Telepass.

Valuation

Assume, based on comparable deals, that Wash Out sold a 20% equity stake in their company to Telepass.

Valuation = investment / equity stake sold.

Then Wash Out is valued at €1 million / 20% = €5 million post-money.

Exit

Assume, based on comparable deals, that Telepass wants to make 15x on their investment.

Exit value = valuation * money multiple.

Then Wash Out’s €5 million valuation requires a €5 million * 15 = €75 million exit value.

To simplify, this ignores dilution. To make 15x with 50% dilution, the €5 million valuation actually requires a €5 million * 15 / (1–50%) = €150 million exit value.

Revenue

Assume, based on comparable companies, that Wash Out trades at 3x revenue per year at exit.

Revenue per year = exit value / revenue multiple.

Then Wash Out’s €5 million valuation requires €75 million / 3 = €25 million revenue per year at exit. Or €2.1 million revenue per month.

Washings

Wash Out charges €21.90 per washing including VAT. At 22% VAT, that’s €17.95 per washing excluding VAT

Washings per month = revenue per month / price per washing.

Then Wash Out’s €5 million valuation requires them to sell €2.1 million / 17.95 = 116,000 washing per month at exit.

Obviously, Wash Out doesn’t need to sell to 116,000 new customers per month. They do need to sell 116,000 washings per month.

For context: in 2017 Milan had approximately 701,000 cars.

Originally published at venturevalue.com on February 20, 2019.