Determining a Valuation Strategy for Alcan Systems

Alcan Systems Example Project

Startup Venture in Darmstadt, Germany

Company Description

 Alcan Systems is a smart antenna company based in Germany, focusing on a new low-cost flat panel antenna (FPA) that represents a technological breakthrough in satellite and cellular communication.  The company manufactures smart antennas which are flat, ultra-thin, and able to adjust their beam electronically without any moving parts. These features will allow them to be mounted on moving vehicles (cars, trains, airplanes, ships etc.) to track all satellites (GEO, MEO & LEO). The antennas could also be incorporated into 5G wireless CPEs and mobile devices in the near future.    

There is a very large market opportunity (€7.5 billion annually by 2025) emerging, and Alcan is well positioned to be a leading player. Their antenna achieves up to ten times reduction in cost compared to similar antennas. Over the past two and a half years, the company has raised money through strategic investors (Merck, SES, and BOE) rather than financial investors. They have raised €7.5 million over two years, while their US competitor, Kymeta (backed by Bill Gates) has raised $215 million over five years. Alcan’s technology is competitive, but Kymeta has resources and a first product. Alcan is currently planning to raise €25 million  through a Series B investment.

Project Description

 The questions that Alcan wanted the student team to investigate included the following:

  • What is a realistic valuation range for the company?
  • What should be our optimal funding strategy?
  • As a European startup, what can we do to offset the funding power of our US competitor?
  • How can we get closer to US valuations while being based in Europe?
  • How do we maintain our valuation target while funding options are limited?

The student team was provided with extensive company materials, and received guidance both from management and an investor.  In addition, Alcan hosted the student team at their offices in Darmstadt for a few days during January.