BUSINESS PLAN
(2009-2013)
PANMIND
- An Academically oriented Social Networking site
TABLE OF CONTENTS
1.
EXECUTIVE SUMMARY ...................................................................................... 4
2.
COMPANY DESCRIPTION ................................................................................. 7
2.1.
2.2.
2.3.
2.4.
3.
MARKET ANALYSIS .......................................................................................... 14
3.1.
3.2.
3.3.
4.
Introduction .................................................................................................. 8
Business Model ............................................................................................. 9
Services ........................................................................................................ 11
Company Structure .................................................................................... 13
Industry Analysis ....................................................................................... 15
Industry Growth Prospects ...................................................................... 18
Competitive landscape .............................................................................. 20
MARKETING PLAN ............................................................................................ 29
4.1.
4.2.
Target market ............................................................................................. 30
Marketing Strategy .................................................................................... 38
5.
SWOT, RISKS AND EXIT PLAN ...................................................................... 41
6.
FINANCIAL HIGHLIGHTS ............................................................................... 44
6.1.
6.2.
6.3.
6.4.
Key Financial Indicators ........................................................................... 45
Capital .......................................................................................................... 45
Projections ................................................................................................... 47
Valuation ..................................................................................................... 50
LIST OF TABLES
Table 1: Social Networking - Unique Visitors ............................................................ 16
Table 2: Social Networking Users – Worldwide........................................................ 17
Table 3: Social Networking usage trends ................................................................... 17
Table 4: Growth Rates of Popular Social Networking Sites..................................... 19
Table 5: Competitor Analysis – Direct Competitors ................................................. 21
Table 6: Competitor Analysis – Indirect Competitors .............................................. 23
Table 7: Social Networking by Region ........................................................................ 30
Table 8: Social Networking sites by Education.......................................................... 31
Table 9: Social Networking users by Age ................................................................... 32
Table 10 : Comparison of Demographics and Lifestyle............................................ 33
Table 11: Estimation of the Target market.................................................................. 36
Table 12: Key Financial indicators ............................................................................... 45
Table 13: Capital requirements .................................................................................... 46
Table 14: Projected Income Statement......................................................................... 47
Table 15: Projected Cash flow Statement .................................................................... 48
Table 16: Projected Balance Sheet ................................................................................ 49
Table 17: Number of users ............................................................................................ 50
Table 18: Valuation Based on Projected Cash flows ................................................. 50
Table 19: Discounted Cash Flow Valuation ............................................................... 51
1. Executive Summary
Opportunity
Panmind will be the first social network in the world offering collaboration tools
such as the ones offered by Google docs and Basecamp and this will really allow
members to work together. The site proposes to function as a connecting place
between researchers, academicians, professors, politicians, business
men/entrepreneurs and students of all academic sectors. It will also serve as a
point of contact for the academic sectors and the professional working class.
It has been noticed that most of the social networks till date have tried to mimic
feature of a particular category of social network. And in contrast users are
looking out for sites that clearly differentiate their services.
Business Model
Panmind will start off with a combination of Freemium model and
Advertisement model. It will also incorporate the features of Referral pay
revenue model little later (2011).
Market and Industry
The market growth rate for a social networking site is entirely dependent on the
efforts taken by the site to differentiate its service and generate awareness among
internet users. The total number of social networking users in June 2008 was
around 580 million, that grew 64 million (12.4%) during the last 6 months.
Asia, Europe, the Middle East and Africa (EMEA) and North America contribute
to the larger amount of social networking users. Asia contributes 35% of users,
while Europe, the Middle East and African region contributes 28% of users,
followed closely by North America contributing 25%. The Caribbean and Latin
America region contributes 12% of total social networking users.
Competition
Panmind’s direct competitors will include players of typical social networks like
the Facebook, Myspace, Hi5 followed by players of academic/informational
databases like the Wikipedia, and other paid data bases followed by players of
professional and academic networks like the LinkedIn, Academici and
Studivz.net.
Panmind’s indirect competitors include Google docs, BaseCamp, Zoho.com,
ConceptShare.com, SlideShare.com, MindMeister.com, Nature.com and
Science.com.
Target Market
Panmind’s target market would be the educated customers between the 18 to 35
years of age. Its target market will be the universities and educated working class
in the regions of Asia, North America and Europe.
Marketing Strategy
As an initial phase of the marketing strategy, Panmind will hire able
academicians and researchers to seed content like articles, research papers and
other ideas on current market topics, enable internet visitors to post queries to
the site even if they have not yet registered. Later, Panmind will adopt viral
marketing.
Financial Highlights
The total funding requirement for the project is Euro 1000,000 and this would be
funded in the form of 20% from Owner’s contribution and 80% from investors.
The number of unique visitors forms the base for revenue generation for
Panmind. Though the financial plan expects no visitors in the first year of
operations i.e.: 2009, it is projected to be 1.3 million in 2010 and projected to rise
to 10.9 million by end of 2013.
Discounting the Cash Flows from the project using a discount rate of 15% the
proposed plan generates a NPV of more than Euro 4.7 million and an IRR of
121%, which indicates the proposed plan, will generate handsome returns. The
use of high discount rate is because of the inherent risk involved in the project.
14,000.0
12,000.0
Euros ('000)
10,000.0
8,000.0
Revenue
6,000.0
Net Profit
4,000.0
2,000.0
0.0
-2,000.0
2009
2010
2011
2012
2013
2. Company Description
2.1. Introduction
Panmind aims to launch an academic oriented social networking site. The site
proposes to function as a connecting place between researchers, academicians,
professors, politicians, business men/entrepreneurs and students of all academic
sectors. It will also serve as a point of contact for the academic sectors and the
professional working class. The site is determined on providing a platform to
enable users share knowledge, technology, ideas, academic literatures,
commentary, analysis, descriptions, research materials, make political
agreements, associate in social interactions and conduct online workshops
without any hassles.
Value Proposition
Panmind will be the first social network in the world offering collaboration tools
that allows its users to create and edit documents online while collaborating in
real-time with other users. The site will characteristically inherit the features of
Google Docs and BaseCamp. Panmind’s knowledge sharing platform provides
collaborative tools like Web-based word processor, spreadsheet, presentation,
calendar, wiki-style web-based text documents, file sharing, time tracking,
messaging system, business-oriented online chat service and form application.
The firm’s platform also operates as a one-to one marketing and communication
tool for entrepreneurs and marketers.
The vital features of Panmind
 Panmind will enable users to post papers, articles or research materials on the
site. Users will feel nice to be able to upload the papers, with an abstract,
author’s profile, information on other sites it was sited/where it was accepted
(optional), title, other papers that the author has sourced etc without big
hassles like media filters.
 Serving as a network based upon citations will prove very powerful to
Panmind. This feature will not only enable one to see what papers cite other
papers but also points to who cites other people. Such a feature will help
students to track e mentors, cite courseware etc. The feature is also of great
use to marketers to track the profiles of users with interest in a particular
product category.
 Enabling users to set up groups/corporations related to various areas of
research or interests of students, politicians, entrepreneurs or any other
academic division will make Panmind a really interesting site. A user could
connect to all the other users with similar interests. For instance an user
interested in data mining research group will get to share his/ her ideas with
all the others in the that group. This feature will also prove very powerful to
Panmind as one could see where/how others with same interests might get
their influence/work/information from.
2.2. Business Model
Panmind will start off with a combination of Freemium model and
Advertisement model. It will also incorporate the features of Referral pay
revenue model little later (2011).
The Freemium business model works by offering basic services for free, while
charging a premium for advanced for special features. The model offers service
for free in order to acquire a lot of customers very efficiently through word of
mouth, referral networks, organic search marketing, etc, then offer premium
priced value added services or an enhanced version of the existing services to the
customer base.
Panmind initially follows the feature of Freemium and advertising model. It will
depend on ads for its revenues and not charge its users for any of the basic
service provided.
The freemium model helps initial visitors try out the features of the site without
any hassles. This is where the site has to prove its service and capabilities. A
perfect seeding will help the site prove its capabilities at this stage.
Though Panmind depends on the ad model for its revenue in the beginning, the
model might not be able to generate any significant revenue without a sizable
customer base. Hence Panmind will initially have to depend on the freemium
model to prove it’s self and also consider investing on the referral pay revenue
model and an affordable marketing plan to gain awareness about its presence in
a very short span.
A combination of referred pay revenue model at this stage will really prove
beneficial to the site. Lure the existing users to win prices if they refer an user
belonging to the exact target audience group that Panmind is looking for (For
instance - a student referring his professor would be very beneficial for Panmind,
or, the maximum number of feeds directly or indirectly routed through a
particular user will be rewarded). This way the freemium model coupled with
referred pay revenue model will help the site to create its initial user base.
Though expensive, the combination will act as a great tool to spread awareness
about Panmind. The model will greatly help the site increase its subscriber base
in a short span, as having a huge set of educated subscriber base is the most
important feature for a site to succeed in long run.
It will depend on the referral model to check for identity and authenticity of user
profile, the referral model will particularly used when any subscriber wishes to
conduct online seminars, conferences etc. The user must either be referred by at
least 5 members of the same institution irrespective of positions or give proof of
reference from the organization itself. This will help Panmind to check for the
authenticity of its users. Creation of false identities can be avoided.
Later with time, when the site gains awareness among customers and gains a
sizable number of users who trust the value delivered by Panmind, the site will
pull in the features Paid membership model.
This will help the site create for itself another source of revenue. But the risk
ahead such a model is that Panmind will have to keep itself abreast of all the
changes in the market, and constantly to match its deliverables to the
requirements and tastes of the customers in vogue. Gradually the site will have
two sources of revenues – ads and customers.
2.3. Services
Panmind as an academic oriented social networking site will offer the following
services:
Unique Features offered by Panmind
 Papers - Panmind enables users to post papers, articles or research materials
on the site. Users will feel nice to be able to upload the papers, with an
abstract, author’s profile, information on other sites it was sited/where it was
accepted (optional), title, other papers that the author has sourced etc without
big hassles like media filters.
 Citations - Serving as a network based upon citations proves very powerful
to Panmind. This feature will not only enable one to see what papers cite
other papers but also points to who cites other people. Such a feature will
help students to track ementors, cite courseware etc. The feature is also of
great use to marketers to track the profiles of users with interest in a
particular product category.
 Collaboration- Being able to collaborate with other academic sites on papers
and projects would be critical. Enabling users to list skills, research groups
been with, and work that one looks out for would be an excellent value add
for the site.
 Groups- Enabling users to set up groups/corporations related to various areas
of research or interests of students, politicians, entrepreneurs or any other
academic division will make Panmind a really interesting site.
► Academic/ Career Networking features
 Next Generation Classroom
 Provide increased parental Involvement to guide students
 User created blogs to share ideas
 Users can share their portfolios
 Serve as a platform to conduct online workshops and conferences
 Promote technological transfers
 Operate as an one-to-one marketing and communication platform to
marketers and entrepreneurs or even academicians to gain publicity for
their work and research
 Enable teachers and students to assign and submit homework online
 Enable students and researchers to search, view and interact with
ementors in the industry side
 Conduct contests among users to provide the best feeds on various topics,
contests to refer maximum number of users, contests to provide tips to
make the site better or even conduct an online seminar competition on
various topics that fits the news of the time and reward the most worthy
user contributions
 Online calendars where users can share their plans and ideas with various
other online professional or social groups and friends or working
partners located across the globe
 Tags to connect users with common interests
 Enable creating/making/join groups with similar interests
 Enabling to add RSS content
 Message Boards
 Chat rooms
 Blogging
 Micro Blogging
 Web Widgets
 Conduct online workshops, conferences and fairs
 Facilitate online agreements
► Social Networking features
 Personal mailbox
 Media Player
 Chat rooms
 Video sharing
 Online contests / competitions/ quizzes with rewards to enhance user
login rate
 Picture galleries and photo sharing
 Tags to connect users with common interests
 Web widgets
 Profile wizards that allow non- technical users to create their own custom
page design and advanced profiling for users who would like to
personalize their profiles with their own custom styles
 Enable creating/making/join groups with similar interests
 Instant messaging and online chatting
 User created blogs to share ideas
 Micro blogging
 Users can share their portfolios
 Blogging
 Podcast
2.4. Company Structure
i.
Executive Team
Chief Executive Officer
Emanuele Caronia
Assistant to CEO
TBD
Product Manager
Accounts Manager
TBD
TBD
Software Developer 1
ii.
Software Developer 2
Development Team
System
Administrator
Edoardo Batini
Consultant 1
Consultant 2
Consultant 3
3. Market Analysis
3.1. Industry Analysis
Human networking has been around since the dawn of civilization, but new
technology promises to bring it into the Internet age. New companies are quickly
forming around the idea that networks can be created, traversed, searched, and
analyzed for the benefit of social and business users.
The Interactive Social Networking Industry comprises companies seeking to
navigate, analyze, or display social connections of friends, colleagues, and
acquaintances. The more advanced features allow weak links and friend-of-afriend links to be exploited for social or business networking purposes. A user
may use these applications to find contacts, or to understand what relationships
exist.
Social networking sites focus on the building online connectivity for
communities of people who wish to share their interests and activities. Users
across the world could associate with online social networks for a variety of
reasons like, Personal networking to share information and keep in touch with
friends; Research financial, family, and other personal decisions; Network with
other business associates and clients; Attend virtual classes to obtain online
degrees or certifications; Connect with other hobbyists who share your passion
for the same interests and activities; Conduct scientific or academic collaboration
and research or Accumulate and spread news or rumor across the global
community.
Social networks act as an exploratory tool for people interested in exploring the
interests and activities of others. The various categories of social networks
include, Informational networks like Wiki or Do-It-Yourself Community;
Professional Network like LinkedIn or Canon Professional Photographer
Community; Educational Networks like Academici.com or Studivz.net;
Academic research based networks like Thomson Reuters Scientific Research or
OVID Health Research; Networks for hobbies like GardenWeb or Automotive
Forums or typical Social networks like the Facebook, MySpace and ORKUT.
It has been noticed that most of the social networks till date have tried to mimic
feature of a particular category of social network. And in contrast users are
looking out for sites that clearly differentiates their services. The new ways of
communication created by the social networks have embraced millions of users
worldwide, to the extent that it has become an enduring part of their day to day
life.
The total number of social networking users in June 2008 was around 580
million, that grew 64 million (12.4%) during the last 6 months. (That’s over twice
as fast as the total internet audience.)
Table 1: Social Networking - Unique Visitors
Social Networking: Growth
Total Unique Visitors
(000)
Jun-08
Total Internet: Total Audience
Social Network: Total Audience
Facebook
MySpace
hi5
Friendster
Orkut
Bebo
Other
860,514
580,510
132,105
117,582
56,367
37,080
34,028
24,017
179,330
Dec-07
815,797
516,318
97,792
107,167
31,428
29,735
25,138
21,282
203,776
1H 08 Growth
%
5.5%
12.4%
35.1%
9.7%
79.4%
24.7%
35.4%
12.9%
-12.0%
in (000)
44,717
64,192
34,313
10,415
24,939
7,345
8,890
2,735
-24,446
Source: comScore Inc.
There are around 300+ social networking players in the industry. For the year
2008, the market became increasingly concentrated amongst the 6 market leaders
in the industry (Facebook, MySpace, Hi5, Friendster, Orkut, Bebo).
Although the unique visitors to the leading 6 social networking sites increased
by 88 million, unique visitors to the other 276 social networking sites in the
category actually fell by 24 million from December to June. This might be due to
the lack of differentiated service provided it is really becoming hard for the new
social networks to gain traction at this point
Regional Analysis
As per the below table, Asia, Europe, the Middle East and Africa (EMEA) and
North America contribute to the larger amount of social networking users. Asia
contributes 35% of users, while Europe, the Middle East and African region
contributes 28% of users, followed closely by North America contributing 25%.
The Caribbean and Latin America region contributes 12% of total social
networking users.
Although Europe, the Middle East and Africa totally contribute to 28% of users
worldwide, Middle East and Africa has a very small portion (refer Table 7).
Table 2: Social Networking Users – Worldwide
12%
35%
28%
25%
Asia
North America
Europe, the Middle East and Africa
Caribbean and Latin America
Source: Datamonitor Plc
Table 3: Social Networking usage trends
Source: wave_3
The target market for a social networking site is ever growing. Day in and day
out new users join social networking sites. New users for social networking sites
pour out through the following means,
 Younger generations grow up to be social networking users
 Grown ups but computer illiterates might gradually find the need to use a
social networking site for various reasons like finding contacts.
Other than new users joining social networking sites, already existing users of
other sites might find the need to join a new social networking site.
3.2. Industry Growth Prospects
The market growth rate for a social networking site is entirely dependent on the
efforts taken by the site to differentiate its service and generate awareness among
internet users. The growth rate could ideally range from 0% to more than 1000%
as in case of Facebook, which witnessed a 1234.10% growth rate for the period
2004-2006.
Facebook was launched in Feb 2004. More than half (around 9500 students) of
Harvard students became its users within the first two months of its launch and
by the year end (2004) it registered more than 2 million users. It portrayed a
growth rate of 1234.10% in two years (for the period 2004 - 2006).
All that is needed for an elevated growth is to differentiate Panmind from the
existing players. For instance, Facebook differentiated itself as a place where you
share real information with real friends in a secure setting, in spite of launching
years after some of its rivals.
Facebook started on college campuses in early 2004, and only connected with
people who already knew each other on campus. But over the years it opened up
to new networks like, high schools, companies, and eventually cities and
countries. Yet, Facebook retained this concept of privacy, while its rivals like
MySpace made the user profiles public. Facebook even today only lets others see
excerpts of a user profile unless they’re friends or in the same network as the
user is. The result is that Facebook has near-universally convinced its users to
provide real information about them.
Another instance is that of LinkedIn. Though the idea of launching LinkedIn as a
professional networking site got conceived in 1997, the site got officially
launched in 2003. LinkedIn started with an initial investment of $4.7 million and
only 300 users (all of them were close contacts of its founders), but, ended the
year 2003 with 81,000 members and 14 employs. The site pumped in investments
of $10M, $12.8M and $53M in the years 2004, 2007 and 2008 respectively.
The below analyzes the growth rate of the various sites. The growth rates
indicate that user growth rates are very low in the initial stages of launch but
project monstrously depending on the rate of efforts taken by the site to
differentiate itself and generate awareness among users.
It is also felt that the sites have experienced massive growth rates only through
viral marketing. Sites like Face book and LinkedIn have also partnered with
latest video games, large firms and university sites for ads to bring in awareness
about the site and thus foster user growth rates.
Table 4: Growth Rates of Popular Social Networking Sites
Site
Year of
Launch
Unique Visitors
('000)
Sep-06 Sep-07
Sep-08
Facebook
2004
7765
MySpace
2003
55849
Hi5*
2003
18098
LinkedIn
2003
1762
Youtube
2005
25,860
Twitter.com
2006
N/A
Wikipedia
2001
35650
*Hi5 – visitors as of June 06, 07 and 08
18090
68449
28174
4075
47,417
533
51648
39003
117,582
56367
11,924
75,389
2,359
60,200
y-o-y growth
%
2006-07 2007-08
133.0%
22.6%
55.7%
131.3%
83.4%
N/A
44.9%
115.6%
71.8%
100.1%
192.6%
59.0%
342.6%
16.6%
Source: comscore Inc., Nielsen Ratings
The growth rates of various firms except for Face book’s growth rate portray the
fact that social networking sites take a minimum of 3 years to be up and running
with massive user bases.
Academici and Studivz.net – Monthly Unique Visitors
Source: Compete.com
3.3. Competitive landscape
Panmind aims to come up with a combination of in vogue features of various
kinds of social networking sites. It will have in it, the much desired features of
social networking sites (popular features of Face book)+ Informational
networking features (Popular features of Wiki)+ Professional Networking
features (popular features of LinkedIn)+ Educational Networking features
(features of Academici.com). Panmind will be the first social network in the
world offering collaboration tools such as the ones offered by Google docs and
Basecamp and this will really allow members to work together.
The site would in effect be a hybrid of individual centric networking and
customer centric network. This quality of Panmind, inheriting the features of
more than one type of social networking site with educated user base makes it
have a wide of range of competitors.
Other than the features of social networking sites, databases and professional &
academic networks, Panmind will also have in it the characters of web-based
project management tools and other online applications facilitating real time
collaboration and knowledge sharing. This makes Panmind face competitive
threats not only from social networking sites, databases and professional &
academic networks, but, also from a set of indirect competitors like Google docs,
BaseCamp, Zoho.com, ConceptShare.com, SlideShare.com & MindMeister.com.
Panmind’s direct competitors will include players of social networks like the
Facebook, Myspace, Hi5 followed by players of academic/informational
databases like the Wikipedia, and other paid data bases; players of professional
& academic networks like the LinkedIn, Academici and Studivz.net.
The table below shows the comparative analysis of the direct competitors of
Panmind. It is quite evident from the below table that:
1. Majority of the visitors to academic sites listed in the table are from the
Afro-American, Canadian and Asian regions
2. Most of the sites depend on Ads for revenue
3. Most academic based social networking sites use a free membership
model to begin with. Gradually as a the site begins to get popular and the
site has proved its worth it gradually shifts to the Freemium model, to the
extent that few of the sites have started on completely following the paid
membership model.
Table 5: Competitor Analysis – Direct Competitors
Net
Worth
Business
Model
User Demographics
(Mar 2009)
Total
Educated
Users/worldwide
users
distribution of
User base
Average
number of its
users using
other social
networks
Daily Ad
Revenue
Name
Description
Face book
Face book is a social
networking site
$481.8
Million
Free
user 73,787,766 Model
74%- Cauc
14%- AfrAm
6%-Asians
5%- Hisp
1%- Other
High % of
college
graduates
2.9
$660,003
MySpace
MySpace is a social
networking site
$301.13
Million
Free
user 53,066,785 Model
69%-Cauc
12%- AfrAm
4%-Asians
14%- Hisp
1%- Other
High % of
people with
no college
2.4
$412,502.83
LinkedIn
Professional
Network
$16.28
Million
Free
user 11,228,746 Model
79%- Cauc
9%- AfrAm
8%-Asians
3%- Hisp
2%- Other
High % of
graduates
and post
graduates
3.2
$22,300.12
HI5
Hi5 is a social
networking site
Academici.com Encourages
networking for the
academic sector
only
$141.71
Million
Free
user 2,176,014 Model
30%- Cauc
21%- AfrAm
6%-Asians
41%- Hisp
2%- Other
High % of
people with
no college
$4,467.60
Freemium
Business
model
1791 Academicians in
US make up
majority of its
users base
2.8
$194,120.29
High % of
Graduate
and Post
Graduate
users
4
(approximately)
$6.12
Wikipedia
Wiki is an free
informatory
network
$344.15
Million
Free
user 1,525,839 Model
67%-Cauc
10%-AfrAm
9%-Asians
13%-Hisp
1%-Other
High % of
Graduate
and Post
Graduate
users
4
(approximately)
$471,431.57
studivz.net
Encourages
networking for the
academic sector
only
$15.35
Million
Free
user 26,668 Model
85%-Cauc
2%-AfrAm
2%-Asians
7%-Hisp
3%-Other
High % of
Graduate
and Post
Graduate
users
4
(approximately)
$21,021.75
Source: http://siteanalytics.compete.com/academici.com/?metric=uv; Quantcast.com;
http://websiteoutlook.com/www.academici.comhttp://mywebsiteworth.com/site/academici.com
Indirect Competitors
Panmind’s indirect competitors include Google docs, Basecamp, Zoho.com,
Conceptshare, Mindmeister and Slideshare. The indirect competitors are not
social networking sites but the ones which provides collaboration tools.
Table 6: Competitor Analysis – Indirect Competitors
Name
Year of
inception
Description
Unique
Visitors
(2008)
Demographics
Rate of
Users
educated
users
78%
29% no
cauc,
college,
7%
59%
AfrAm, college,
1%
12%
Asians, school
9%
graduates
hisp;
5%
others
Google
Docs
Oct 2006
The site acts as a free, Webbased
word
processor,
spreadsheet, presentation, and
form application.
It allows
users to create and edit
documents
online
while
collaborating in real-time with
other users. Google Docs have
merged in it the features of two
services
Writely
and
Spreadsheets.
130,285,302
Base camp
2006
The site offers to-do lists (is
similar to Google calendar),
wiki-style
web-based
text
documents,
milestone
management, file sharing, time
tracking, and a messaging
system, integration with its own
Campfire product (is a webbased, business-oriented online
chat service)
160,548
NA
NA
Zoho.com
2005
Zoho.com offers a suite of
online web applications geared
towards increasing productivity
and easy collaboration. Office
tools include a word processor,
spreadsheet, presentation tool,
hosted wiki, notebook, mail, and
CRM.
333,568
80%
cauc,
8%
AfrAm,
4%
Asians,
6%
hisp;
2%
others
37% no
college,
43%
college,
20%
school
graduates
ConceptS
hare
2006
The site allows users to easily
share discuss and mark-up
designs for review over the web.
8,473
NA
NA
Mindmeis
ter.com
November
2007
Mindmeister is a collaborative
online mind mapping tool. It
facilities real-time collaborations
between users across the world
to
conduct
brainstorming
sessions.
41,680
NA
NA
slideshare
.net
2005
The site offers, embedding
slideshows into your own blog
or website, share slideshows
publicly or privately, synch
audio to your slides, market
your own event on slideshare,
join groups to connect with
SlideShare members who share
your interests, download the
original file.
925,203
NA
NA
Source – Quantcast.com; science.com; nature.com; compete/siteanalytics.com
Other indirect competitors include websites which offer scientific contents
through which students & professionals can find/buy/read articles. The websites
include:
1. www.nature.com
 Nature is the world's foremost weekly scientific journal and is the flagship
journal for Nature Publishing Group (NPG).
 Nature.com is one of the most popular scholarly websites on the internet,
serving almost 12 million visitors a month. Authors, editors and readers
interact through letters, blogs, file-sharing and social networks.
 The group has gained reputation for innovation, developing timely and
award-winning solutions to scientists' information needs.
 He site also offers an excellent file sharing resource, Connotea.
 NPG is a subsidiary of Macmillan Publishers Ltd
 Launched in 1869 the firm had 627849 unique visitors in Feb 2008 and
778491 unique visitors in Feb 2009, the user growth rate for the period is
24%.
2. www.science.com
 Founded in 1880, is the outlet for scientific news, commentary, and
cutting-edge research, with the largest paid circulation of any peerreviewed general-science journal.
 The firm has 14407 unique visitors in Feb 2008 and 10398 unique visitors
in Feb 2009, the growth rate for the period is -28%.
Source: Compete.com
i.
Competitive Advantage
Services provided by Panmind will be a combination of features offered by social
networking sites like the Face book, Informational networks like Wiki,
Professional Network like LinkedIn and Educational Networks like
Academici.com.
Panmind will also have in it the characters of web-based project management
tools and other online applications facilitating real time collaboration and
knowledge sharing as with Google docs and BaseCamp.
a) Benefits to customers
The value preposition offered by the site to its customers is as below,

Job opportunities: The students/individuals associated with Panmind can
get
better
jobs
through
personal
contacts.
Even
the
professors/researchers/Ementors from various fields can get hold of
prospective individuals for their professional/business requirements
through personal contacts.

Promotion and Exposure: The ideas/ literatures or work material of
researchers, professors, aspiring students will gain a huge exposure as
their expertise and skills are promoted within the big social community in
a fast pace.

Learning: Individuals gain opportunities to learn new concepts,
technologies, avail online help from the experts and contacts for
professional growth. Sharing knowledge also aids to further improve
awareness of a subject and build reputation.

Marketing: The Social Networking sites act as a best tool for word-of
mouth marketing.

Alliances and Referrals: Panmind also provides opportunities to form
strong alliances and referrals. This feature aids individuals to get
academic as well as professional contacts for growth.

Papers - Panmind enables users to post papers, articles or research
materials on the site. Users will feel nice to be able to upload the papers,
with an abstract, author’s profile, information on other sites it was
sited/where it was accepted (optional), title, other papers that the author
has sourced etc without big hassles like media filters.

Citations - Serving as a network based upon citations proves very
powerful to Panmind. This feature will not only enable one to see what
papers cite other papers but also points to who cites other people. Such a
feature will help students to track e mentors, cite courseware etc. The
feature is also of great use to marketers to track the profiles of users with
interest in a particular product category.

Collaboration- Being able to collaborate with other academic sites on
papers and projects would be critical. Enabling users to list skills, research
groups been with, and work that one looks out for would be an excellent
value add for the site.

Groups- Enabling users to set up groups/corporations related to various
areas of research or interests of students, politicians, entrepreneurs or any
other academic division will make Panmind a really interesting site.

Some of its other benefits include: People with shared interests make
friends, friends stay connected, and physicians share life-saving
information. Panmind can be one site that can provide a user with all the
needed tools to keep a journal, manage appointments, receive customized
news, share ideas or information and converse on hot topics as well as
stay in touch with kith and kin. Users and businesses with their own
websites can also create profiles with links back to their sites to improve
their site's search engine ranking. This widens their business. A user
needing a product or service might prefer to search for the product or
service on a social network site rather than using a basic search engine. Or,
a potential customer could discover the company while browsing
connections of connections.
b) Identity Check
Panmind has come up with competent methods to verify the real
identity/relevance of the people involved in the network.




A user can however get subscriptions to the site without any references/
recommendations. They can also share their comments and ideas without
any filters. But users who wish to post citations/ materials, conduct online
workshops or conferences on the network will have to get in at least 5
references for his identity in relevance to his profile displayed
Another option for identity check would be to be referred by the firm or
the research center or the university that the individual/ group is a par of.
The profile, contacts, communications of the person who wants to make
friends or join an online group will be open for checks from the opposite
party. Users can accept or reject any users friendship request based on his
current associations, interactions and profile
If a particular user chooses not to add a particular user to his group. They
have the facility to block the messages sent by the particular user
Any user, apart from the initial request to be added to a particular group/
individual user will not be able to send messages or interact without the personal
interest of the group/ individual user
4. Marketing plan
4.1. Target market
a) Demographics
 Worldwide Social Networking users
According to a report by ComScore, the total number of social networking
users in the world has increased by 25% in June 2008 and jumped from 464
millions to 580 millions, majority of this growth came from the increasing
popularity of Facebook and Hi5.
As evident in the below Table 7, Asia, Europe and North America contribute
the majority of unique visitors to Social networking sites. Asia is not only the
fastest-growing region for social networking, it is also the largest. But in
contrast to the more number of unique visitors contributed from Asia, it is
also reported that Asia rank fourth in the average minutes per month per
visitor, pioneered by Latin America, North America and Europe.
Table 7: Social Networking by Region
Social Networking by Region
66%
70%
60%
200
50%
150
40%
35%
33%
100
30%
23%
20%
50
10%
9%
0
0%
Asia Pacific
Europe
June-07
Source: comScore Inc.
North Ame rica
June-08
Latin
Middle East -
Ame rica
Africa
Growth
% Growth 07-08
Unique Visitors (Mil)
250
 Users of various social networking sites by education
Information related to education of users of various sites sorted by highest
monthly unique visitors are given in the table below. The lowest values per
column are indicated in red and the highest values per column are in green.
U.S. Monthly Unique are in millions and other column values are in
percentages of entire site’s visitors.
Table 8: Social Networking sites by Education
College %
Grad
School %
US Monthly
Unique in
millions
53
44
51
49
48
54
61
24
52
50
45
41
58
51
58
62
50
47
38
41
39
40
39
36
32
48
37
39
42
44
34
40
34
31
40
40
9
14
10
11
12
10
7
28
11
11
13
14
8
9
8
7
10
12
45.00
32.00
12.00
12.00
5.80
5.80
5.50
4.40
4.20
4.20
2.40
2.20
1.90
1.90
1.70
1.60
1.60
1.50
40
30
42
51
36
44
31
9
47
54
43
35
39
40
49
32
12
16
15
14
26
15
20
59
1.50
1.20
0.70
0.40
0.40
0.20
0.20
0.01
No college
%
MySpace
Facebook
Classmates
Reunion
Tickle
Hi5
My Yearbook
LinkedIn
Flickster
Xanga
Yuku
Livejournal
Tagged
Bebo
Cafemom
Fubar
Yahoo!360
MSN LiveSpaces
BlackPlanet
Friendster
Ning
Sonico
Orkut
Urbanchat
Twitter
ASmallWorld
Site
http://tomuse.com/social-networking-demographics-who-has-smartest-andwealthiest-users/
 Popular networking site users by age
Table 9: Social Networking users by Age
<18 Yrs
18-25 Yrs
26-35 Yrs
36-45 yrs
>45yrs
Facebook
17%
52%
21%
5%
5%
MySpace
20%
40%
27%
7%
6%
LinkedIn
2%
9%
49%
24%
16%
Friendster
12%
39%
36%
7%
5%
Plaxo
16%
39%
24%
10%
11%
Hi5
21%
44%
23%
6%
6%
Source: http://social-media-optimization.com/2008/05/social-network-user-demographics/
From the above table it is evident that LinkedIn has the highest percentage of
it’s users falling in the age group of 26-35 years, the most sought after age
group by advertisers because the people in this age group is not only young
but they also have an income stream and also not only have the desire for
products/services but are also capable of affording it. Majority of the
Facebook’s users fall in the age group of 18-25 years. The people in this age
group are young and are highly tech savvy. It is also interesting to note that
LinkedIn has a high % of its users falling in the age groups of 36-45 years and
above 45 years, understandable given its professional orientation.
 Why do people use social networking sites?
The appeal of social networking is different for everyone. On a personal level
it is a great way to meet interesting people with similar interests. On a
professional level, social networking sites have become a great way to:
 Expand a company’s online brand.
 Promote business articles.
 Promote blog posts and blogging.
 Keep current on the latest news.
 Watch the competition …ok “spy” on the competition.
 Meet colleges.
 Find employment.
Table 10 : Comparison of Demographics and Lifestyle
Names of sites
MySpace
LinkedIn
Demographics
User Base
People with
no college
69%- Inactive
High index of
cauc
people with
12%- Active Afr
no college
Am
4%- Inactive
Asians
14%- Active Hisp
!%- Other Active
members
79%- Inactive
cauc 9%- active
Afr Am
8%- Active Asian
3%- Inactive Hisp
2%- Others
High index of
graduates and
post graduates
Lifestyle
Most accessed features on
Other sites visited by the
the site in ascending order
population
Music/Radio 2.7x
onlinepersonals.com
Instant Messenger 2.6x
hotfreelayouts.com
Teens 2.5x
myhotcomments.com
Communities/Teens 2.5x
applounge.com
Gaming Information 2.3x
bitrhymes.com
Humor 2.2x
mobwarsapp.com
Discussion/Chat 2.1x
zynga.com
Baby 2.1x
wealthymen.com
Fashion/Cosmetics 2.1x
kitnmedia.com
Horoscopes 2.0x
freecodesource.com
Hispanic 2.0x
bumperstickersapp.com
Photo/Video Sharing 2.0x
treadon.us
Educational Resource 2.0x
hot-lyts.com
whateverlife.com
myspacemaster.net
Large number of small, medium and large businesses access this
site
Names of sites
Facebook
Hi5
Demographics
User Base
People with
no college
74%- Inactive
High index of
Cauc
college
14%- Act AfrAm
graduates
6%- Act Asians
5%- Inactive Hisp
1%- Other
inactive members
30%- Inactive
High index of
Cauc
people with
21%- Active Afr
no college
Am
6%- Active Asians
41%- active Hisp
2%- Other Active
Members
Lifestyle
Most accessed features on
Other sites visited by the
the site in ascending order
population
Communities 3.4x
mepopular.com
Teens 2.9x
ayisnap.com
Bridal 2.8x
nliven.com
Fashion/Cosmetics 2.6x
honestybox.com
Baby 2.3x
contextoptional.com
Schools/Universities 2.3x
sgnbar.com
African American 2.3x
socialreach.com
Discussion/Chat 2.3x
whohasacrushonu.net
Humor 2.3x
mobscience.com
Parenting 2.3x
coolapps.com
Men 2.2x
11piecesofflare.com
Music/Radio 2.2x
snapinteractiveapps
Educational Resource 2.2x
makeitwrok.com
Women 2.2x
railsmachina.com
Science/Nature 2.2x
podzone.org
Hispanic 12.9x
hi5modules.com
Instant Messenger 4.9x
actonme.com
African American 4.0x
qloud.com
Gay/Lesbian 3.6x
pixverse.com
Men 3.5x
hi5networks.com
Job Search 3.4x
bubome.com
Communities 3.4x
wamba.com
Discussion/Chat 3.4x
vagos.es
Names of sites
Demographics
User Base
People with
no college
Orkut
41%- Inactive
Cauc
5%- Inactive
Afr.AM
30%- Active
Asians
20%- Active Hisp
5%- Other Active
Users
Source: Quantcast.com
Lifestyle
Most accessed features on
Other sites visited by the
the site in ascending order
population
Humor 3.0x
thelegion74.com
Communities/Teens 3.0x
appspot.com wadja.com
Adult 2.9x
xsignia.com
Music/Radio 2.8x
mtnonline.com
Teens 2.7x
badoo.com
Personals 2.7x
bigbooster.com
Travel News & Info
High index of Instant Messenger 4.6x
minglebox.com
Graduates and Discussion/Chat 3.1x
hipersocial.com
Post
Travel News & Info 2.6x
70mmvideos.com
Graduates
Computer Hardware 2.3x
chakpak.com
Schools/Universities 2.3x
axill.in
Travel 2.2x
globo.com
Photo/Video Sharing 2.1x
bubome.com
E-cards 2.1x
manoramaonline.com
Travel Agents 2.1x
invertia.com
Video 2.0x
sortr.com
Business News & Info 2.0x
malayalamanorama.com
Flowers/Greetings/Gi 1.9x
eenadu.net
Science & Technology 1.9x
deepika.com
Men 1.9x
ajitjalandhar.com
Technology
cricinfo.com
Target Market
Knowing how to market social networks is an important part of the networking
cycle. But before deciding on an efficient market plan it is necessary to be clear
about the target market.



The insights of the market analysis parts make it clear that Panmind’s
target market would be the educated customers between the 18 to 35 years
of age.
Its target market will be the universities and educated working class in the
regions of North America and Asia. It will also be targeting Europe which
has one of the fastest growth rates in social network users and also in the
educated user group.
Estimating that initial four months of 2009 will be used in the
development stages; it would take nearly end of 2009 to completely Betatest and launch the site; early 2010 will be used to collaborate with
academic institutions and market the site through other sources in the
marketing plan itself.
The target market will be the highly educated social network users in North
America, Asia and Europe in the age group of 18-35 years. The estimation of the
target market is explained in the following table.
Table 11: Estimation of the Target market
Worldwide
Target regions (Asia,
North America,
Europe)
650 million
550 million
15%
15%
97.5 million
82.5 million
62.5%
62.5%
Users in Age group 18-35
406 million
344 million
Educated users between 18-35
61 million
52 million
Particulars
Total users
Highly educated users (% of Total)
Highly educated users
Users in Age group 18-35 (% of Total)
Target market
52 million
 Total Users (Dec 2008) is arrived assuming a 12% growth for the half year:
Total users as of June 2008 * 12% growth = 580 * 1.12 = 650 Million
 85% of users are from Asia, Europe and North America
 Target Age group – 18 to 35 years
(Based on RapLeaf*** study, majority of social networking users fall in the
age group of 14-35 years, but since Panmind is an academically based
network, the lower age group(14-17) is excluded from the target market.
 Highly educated users – % of graduates (Table 8)
*** Based on the study conducted by RapLeaf as of July 2008 on 49,269,050 social
networking users located worldwide, majority of them are youngsters between 14 years
to 35 years of age group.
Social
Network
ALL SOCIAL
NETWORKS
Gender
14-17
18-24
25-34
35-44
45-54
55-64
Women
6,322,060
9,651,584
5,683,422
1,929,328
857,965
279,684 97,858
Men
4,050,429
7,546,654
5,543,729
2,113,597
873,135
323,251 108,731
Unspecified
682,756
1,456,780
1,045,381
428,357
181,913
72,196
Age Group
%
14-17
22.4%
18-24
37.9%
25-34
24.9%
35-44
9.1%
45-54
3.9%
55-64
1.4%
65+
Total
Age Groups
0.5%
100.0%
Source - http://business.rapleaf.com/company_press_2008_07_29.html
65+
20,240
4.2. Marketing Strategy
Formulating and implementation of efficient marketing strategies is a vital part
of pre and post launch expenditures. Efficient marketing of the site’s competitive
insights and content will lead to an increased user growth rate leading to better
revenues; build powerful customer relationships and thus retain customer;
amplify brand presence and thus increase traffic to website.

As an initial phase of the marketing strategy, Panmind will hire able
academicians and researchers to seed content like articles, research papers
and other ideas on current market topics, enable internet visitors to post
queries to the site even if they have not yet registered.

Then Panmind will adopt viral marketing. It’s steps to viral marketing are
described in the next section.

It will bring awareness about its launch by collaborating with popular
online programs like video games; marketing platforms of other social
networking sites like Facebook, Orkut and MySpace; associate with
popular online stores like the Netflix, whose majority of customers are
vigorous users of the internet

It will hire bloggers to seed blogs related to the site, its services and
efficiency

To start with, Panmind will collaborate with Google and other search
engines to optimize its content. It will take steps to place abstracts of its
content related to hot market topics on the top pages of the search engine,
and when users wish to read further through the abstract, it will prompt
the user to register with the site

Once any user registers with the site, Panmind will project the other most
read articles/papers on the topic and gradually probe them to pull in five
other worthy users with attractive rewards for lining in the maximum
number of users

Other than just marketing through the online channels, Panmind will
eventually initiate its next step of direct marketing by collaborating with
the websites of universities and work places in the target market; it will
also place ads related to the hot topics addressed by the site on notice
boards of popular universities and work places; make faculty
collaborations; invite students and professionals for online quizzes and
competitions on topics related to current market situations, the best
among them can also serve as a content seed to the site

Once the site stabilizes on a minimum level of user base, it will arrange
online contests, like case study/article/ white paper competitions on
specific topics; invite ideas from the users to increase the net worth of the
service offered and reward the best idea; initiate contests between
application developers to enhance the technicalities of the site.

Panmind will entail anything from leaving fliers at gigs to wearing t-shirts
with its URL and Logo on it among the target audience; for instance,
distribute T-shirts to high school students or graduates at University with
the Panmind’s logo and URL. Panmind focus will include leaving stickers
around possible locations of streets and offices, put posters about
Panmind on the message boards of the various university or high school
campuses.
Steps to Viral Marketing
Viral marketing for Panmind will help it drive new traffic and build new
communities and create opportunities for drastic growth in revenues and users
base. A successful viral marketing strategy will prove very essential for the
success of Panmind as a part of its social networking experience.

Help People Find Panmind
As a part of its initial step to viral marketing, Panmind will make sure that
people know how to find its network. For instance, adding information about
the social network as the footer or in signature in e-mails. Panmind will post
pages reading about the focus of the site on popular forums and chat groups
that allow signatures at the bottom of posts. Put the social networking
information on popular blogs; hire popular bloggers to write about the focus
and benefits of the site. Writing about the site in forums will act as a great
source to help Panmind pull in like-minded users/individuals.

Panmind Will Make Its Site A Fun Place to Visit
Panmind will avail its users many attractive add-ins to customize the look of
their page on the site. These will include countdown clocks, music,
animations and a vast number of other widgets and gizmos to add
personality to individual user pages. These can be a great way for users to
share information in a fun way with other people and attract huge user base.

Panmind Will Make an Interactive Network
Panmind will visit the pages of its members and leave regular comments and
feedback on their postings, help them reach like minded.

Panmind will keep It Fresh
Panmind will regularly keep itself updated on blog related to other social
networks as well as Panmind related Blogs. A relevant and up-to-date blog
will give people a reason to come back and visit Panmind site time after time
again.
Panmind will also keep optimizing its site with popular user postings at
regular intervals. This will help Panmind constantly stay on top lists of search
engines.
Key to Success
Panmind will prove to be a success because of the following:
1. End market chosen.
2. Services match with academic sector
1. End Market: The site is proposed to serve the developing areas of US, EMEA
and Asia.
2. Services match with academic sector: Services provided by Panmind
matches the interests of the academic sector.
Services of academic sector include
 Social networks that do not encourage general social groups that are typically found
on sites like Face book or MySpace
 Would desire to make groups/network with set of people with a specific qualification
 Do not mind paying up if the information is really worth
 Being a part of prestigious data houses like McKinney Quarterly, Knowledge at
Wharton, HBR, EBSCO, Emerald etc.
5. SWOT, Risks and Exit Plan
SWOT Analysis





STRENGTHS
Features of both academic and social networking.
Superior services than other competitors.
Established network of academicians and top universities
Combination of business models – Freemium, Advertising & Referral pay
Strong Management team
WEAKNESS
 Stiff Competition in networking
 Economies of scale – a problem for start up companies
OPPORTUNITY
 Rapid growth in Social Networking users worldwide**
 Lack of established players in academic networking space.
THREATS
 Current Economic Conditions - Recession
 Potential New Entrants into the market space
**The total number of social networking users in the world has increased by 25%
and jumped from 464 millions in June 2007 to 580 millions in June 2008.
Risks
Panmind will seem to provide a dream come true for students, hobbyists,
business men, academicians and professionals wanting to expand their networks.
But the site is bound to encounter problems similar to any other social network.
The kind of problems could be,
 Users might receive invitations from people they do not know. This is
because few users will tend connect with everyone they find on the
network to drive up their connection numbers.
 Circulation/uploading of illegitimate reports related to banned subjects.
This is again due to a set of socially irresponsible users who take
advantage of social networks to circulate reports on banned subjects to
lure children and get their kicks trolling the site and harassing legitimate
users.
 Privacy is also a concern. Younger users may be unaware of the problems
in revealing too much information. Thieves might use profile information
for identity theft. Businesses worry about their employees giving out
proprietary information or using the business brand in an inappropriate
way; for example, a flight attendant posted unprofessional photos of her
wearing her official uniform.
6. Financial highlights
6.1. Key Financial Indicators
Table 12: Key Financial indicators
(EUR 000)
Key Financial Indicators
Total Revenue
EBIT
Tax
PAT
Profitability
Gross Margin
Net Margin
EBITDA Margin
EBIT Margin
2009
43.3
2010
471.3
2011
3,462.8
2012
12,419.3
2013
25,683.9
-436.7
0.0
-436.7
-295.9
0.0
-295.9
2,270.6
0.0
2,270.6
10,756.1
1,274.2
9,481.9
23,537.7
3,223.7
20,314.0
83%
-
94%
66%
67%
66%
97%
76%
87%
87%
98%
79%
92%
92%
-
Free cash flow
-439.9
-493.4
473.9
2,978.3
6,956.0
Discounted Free Cash Flow
-382.5
-373.1
311.6
1,702.8
3,458.4
Sum of Free Cash Flows
4,717.2
NPV of the project
4,717.2
IRR of the project
121%
6.2. Capital
 The total funding requirement for the project is Euro 1000,000 and this would
be funded in the form of 20% from Owner’s contribution and 80% from
investors.
 The contribution from investor will take place in 2 phases- Euro 300,000 or
30% at the start of the project and Euro 500,000 or 50% at the start of the 2 nd
year.
 Most of this capital funding in the first 2 years is consumed by operating costs
for the first 2 years when the revenues are projected to be very minimal and
this will not be able to cover the operating expenses of the company for these
2 years.
Table 13: Capital requirements
(EUR 000)
Capital
Initial Capital
Promoters
Investors/ Private Capital
2009
500
200
300
2010
500
200
300
2011
1,000
200
800
2012
1,000
200
800
2013
1,000
200
800
Additional Capital
Promoters
Investors/ Private Capital
0.00
0.00
0.00
500
0.00
500
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Capital at the end of the year
Promoters
Investors/ Private Capital
500
200
300
1,000
200
800
1,000
200
800
1,000
200
800
1,000
200
800
Capital breakup
Year 1
 Capital expenditure (software & furniture) - Euro 30,000
 Startup costs- Euro 27,600
 Net Operating Cash Outflow- Euro 382,300
Year 2
 Capital expenditure (software & furniture) - Euro 15,000
 Startup costs- Euro 16,000
 Net Operating Cash Outflow- Euro 462,400
 Cash & equivalents at end of Year 2- Euro 66,700
6.3. Projections
Table 14: Projected Income Statement
(EUR 000)
Income Statements
Pay Users Revenue
Advertising Revenue
Referred pay users
revenue
Other revenues
Revenue
Cost of Revenue
Gross Profit
Operating Expenses
Personnel Costs
Sales & Marketing
General & Administrative
Depreciation &
Amortization
Total Operating
Expenses
Income Before Taxes
Provision for Taxes
Net Income
2009
2010
2011
2012
2013
0.0
0.0
182.0
13.7
1,612.0
45.7
5,795.0
100.2
11,583.3
152.6
0.0
43.3
43.3
53.3
-10.00
0.0
80.0
275.7
81.8
193.9
31.2
85.0
1,773.9
200.7
1,573.2
267.0
95.0
6,257.2
369.3
5,887.9
1,056.0
100.0
12,891.9
585.9
12,306.0
298.2
23.3
90.7
443.0
70.0
150.3
503.2
160.0
293.4
522.5
270.0
456.4
527.4
280.0
705.6
14.4
22.2
34.9
45.2
47.3
426.7
685.4
991.5
1,294.0
1,560.2
-436.7
-491.6
581.7
4,593.9
10,745.8
0.0
0.0
0.0
1,274.2
3,223.7
-436.7
-491.6
581.7
3,319.7
7,522.0
 The
revenues for Year 1 and Year 2 are projected to be minimal. But from
Year 3 the revenues are projected to grow significantly and by Year 5 it is
projected to grow beyond Euro 12.8 million.
 Net income for Year 1 is projected to be a net loss of Euro 436,700, but the
company is projected to generate net profits from Year 3 and is projected to
generate a net income of more than Euro 7.5 million for Year 5.
Table 15: Projected Cash flow Statement
(EUR 000)
Cash Flow Statements
Net income
Adjustments:
Depreciation & Amortization
In-process research and
development
Changes in Current Assets and
Current Liabilities
Accounts receivable
Prepaid expenses and other assets
Accounts payable
Accrued expenses and other
liabilities
Net Cash Provided by
Operations
Purchases of Software & furniture
Other Startup costs
2009
-436.7
2010
-491.6
14.4
22.2
34.9
45.2
47.3
0.0
-16.9
-127.1
-384.9
-587.5
40.0
23.9
35.4
39.3
40.2
-382.3
-30.0
-27.6
-462.4
-15.0
-16.0
524.9 3,019.3
-35.0
-25.0
-16.0
-16.0
7,022.0
-50.0
-16.0
Net Cash Provided by Investing
Capital raised
Short Term Credit
Long Term Loan
-57.6
500.0
-31.0
500.0
-51.0
0.0
-41.0
0.0
-66.0
0.0
Net Cash Provided by Financing
Net Change in Cash
500.0
60.1
500.0
6.6
0.0
0.0
473.9 2,978.3
0.0
6,956.0
0.0
60.1
60.1
66.7
Cash and Cash Equivalents,
Beginning of Period
Cash and Cash Equivalents, End
of Period
2011
2012
581.7 3,319.7
66.7
540.7
2013
7,522.0
3,518.9
540.7 3,518.9 10,474.9
 The net cash inflow for Year 5 is projected to be more than Euro 6.9 million.
 The net operating cash outflow is estimated to turn positive from Year 3.
 As previously mentioned, the net operating cash outflow for the first 2 years
is negative.
Table 16: Projected Balance Sheet
(EUR 000)
Balance Sheets
2009
2010
2011
2012
2013
Cash and Cash Equivalents
Accounts Receivables
Prepaid Expenses and Others
Total Current Assets
60.1
0.00
66.7
16.87
540.7
143.94
3,518.9
528.81
10,474.9
1,116.35
60.1
83.6
684.6
4,047.7
11,591.3
Software
Furniture
3.8
18.8
6.3
20.0
15.0
26.3
20.0
20.0
26.3
32.5
Intangible Assets
Unamortized startup costs
Other Long Term Assets
20.7
0.0
25.8
0.0
26.9
0.0
24.0
0.0
24.0
0.0
103.3
135.7
752.8
4,111.7
11,674.0
40.0
0.0
63.9
0.0
99.3
0.0
138.6
0.0
178.8
0.0
40.0
63.9
99.3
138.6
178.8
40.0
63.9
99.3
138.6
178.8
Share Capital
Promoters Capital
Investors Capital
Retained Earnings
Total Stockholders Equity
500.0
200.0
300.0
-436.7
63.3
1,000.0
200.0
800.0
-928.3
71.7
1,000.0
200.0
800.0
-346.6
653.4
1,000.0
200.0
800.0
2,973.1
3,973.1
1,000.0
200.0
800.0
10,495.2
11,495.2
Total Liabilities & Equity
103.3
135.7
752.8
4,111.7
11,674.0
Total Assets
Accounts Payable
Bank Credit
Accrued Expenses and Others
Total Current Liabilities
Long Term Debt
Other Long Term Liabilities
Total Liabilities
Table 17: Number of users
2009
2010
2011
2012
2013
Monthly Unique Visitors
0
1,300,000
4,350,000
7,950,000
10,900,000
Ad Users
0
910,000
3,045,000
5,565,000
7,630,000
Registered Users
0
130,000
565,000
1,360,000
2,450,000
Pay users
0
6,500
28,250
68,000
122,500
Referred users
0
12,000
72,000
264,000
Referred Pay users
0
600
3,600
13,200
 The number of unique visitors forms the base for revenue generation. Though
the financial plan expects no visitors in the first year of operations i.e.: 2009, it
is projected to be 1.3 million in 2010 and projected to rise to 10.9 million by
end of 2013.
 The
number of ad users who form the base for advertisement revenue is
projected to rise from 0.91 million in 2010 to more than 7.6 million in 2013.
The pay users/ users of premium services are projected to rise from 6,500 in 2010
to more than 2.4 million in 2013.
6.4. Valuation
Table 18: Valuation Based on Projected Cash flows
(EUR 000)
Key Financial Indicators
Free cash flow
2009
-439.9
2010
-493.4
2011
473.9
2012
2,978.3
2013
6,956.0
Discounted Free Cash Flow
-382.5
-373.1
311.6
1,702.8
3,458.4
NPV of the project
4,717.2
IRR of the project
121%
The company requires an initial capital of Euro 1 million of which Euro 500,000
will be infused in the start of Year 1 and Euro 500,000 will be infused in the start
of Year 2.
Consultant
1
Discounting the Cash Flows from the project using a discount rate of 15% the
proposed plan generates a NPV of more than Euro 4.7 million and an IRR of
121%, which indicates the proposed plan, will generate handsome returns. The
use of high discount rate is because of the inherent risk involved in the project.
Table 19: Discounted Cash Flow Valuation
(EUR 000)
Discounted Cash Flow Valuation
Revenue
Growth
2009
2010
2011
2012
2013
43.3
275.7
536.1%
1,773.9
543.5%
6,257.2
252.7%
12,891.9
106.0%
EBIT
Less: Adjusted Tax
NOPLAT
Add: Depreciation and Amortization
+/- Change in net working capital
Free Cash Flow before CAPEX
Capital expenditures
-436.7
0.0
-436.7
14.4
40.0
(382.3)
57.6
-491.6
0.0
-491.6
22.2
7.1
(462.4)
31.0
581.7
0.0
581.7
34.9
(91.7)
524.9
51.0
4593.9
1274.2
3319.7
45.2
(345.6)
3,019.3
41.0
10745.8
3223.7
7522.0
47.3
(547.3)
7,022.0
66.0
Free Cash Flow of the firm
(439.9)
(493.4)
473.9
2,978.3
6,956.0
Discount Rate
Assumed perpetual growth
Free cash flow
Terminal value
Present value of FCF
Present value of Terminal value
Implied value of the company
15.0%
10.0%
9,914.8
165,485.0
4,717.2
82,275.3
86,992.5
 Using a discounted cash flow method of valuation, the implied value of the
company at the end of Year 5 will be Euro 86.9 million.
 It should also be noted that the assumed perpetual growth of 10% after Year 5
is very conservative as revenues are growing more than 100% by Year 5.
 Thus,
if the promoters decide to sell their company after 5 years, their
company would be valued at Euro 86.9 million, while the total investment is
only Euro 1 million.