Fun with Balls/Lymb.io: The Corona Crisis Factor in Valu­a­tion #DHDL

Fun with Balls, now Lymb.io, was absolutely trans­parent with its own situ­a­tion when they came to “Die Höhle der Löwen”. The system, which makes it possible to combine computer games with real sports and thus wants to finally get even the laziest off the couch, used to address mainly estab­lish­ments like hotels and gyms because of its size and a price starting at €5,000. But it was precisely these that were hit hardest by the pandem measures. After a strong start in 2019, the startup expe­ri­enced an almost unimag­in­able slump in demand. From a turnover of 1.4 million euros, it went down to 810,000 euros, even though at the end of 2019 every­thing was pointing to strong growth.

Now they came into “the cave” and wanted 1.6 million euros – at a valu­a­tion of a whop­ping 16 million. It was clear that this made the lions swallow at first. And it was also clear that the valu­a­tion would defi­nitely become a topic of discus­sion.

And the founders also brought their latest product with them: Lymb.io is prac­ti­cally the variant for the home, a kind of game console that, combined with a projector, enables a similar gaming expe­ri­ence on any free wall. From now on, it is primarily private customers who are to be addressed until the orig­inal busi­ness segment is up and running again.

Many viewers will now have prepared them­selves for a tough valu­a­tion discus­sion – because if you take the pre-​Corona turnover, you still end up with a good 10-fold multiple in the proposed valu­a­tion. But since the founders only offered 10% of their shares in the initial offer, an investor could easily halve or triple the valu­a­tion in a counter-​offer. And the founders could counter with various argu­ments. Previous invest­ments with avoid­ance of a down­round, current sales pipelines and larger distri­b­u­tion part­ner­ships could certainly play a role here.

But this does not seem to play a role, at least the viewer learns nothing about this. Because although all the lions praise the system itself and Judith Williams in partic­ular seemed very enthu­si­astic about her test, the rating seems so high that it doesn’t even come to a nego­ti­a­tion. Carsten Maschmeyer calls the company a “Corona loser”, which the founders don’t even contra­dict. He also says that their valu­a­tion is that of Corona winners. Of course, this can be inter­preted to mean that Corona winners are those whose busi­ness has not been greatly affected by the measures. Because as we saw in the Porthy case, for example, investors often don’t like it when a start-​up jumps completely on the pandemic band­wagon. Because here you have to reckon with sales plum­meting as soon as the situ­a­tion changes again.

But “normal” continued to be the case for almost no start-​up. Many in the field of e-​commerce and delivery services saw enor­mous growth, but this cannot last. Others saw a signif­i­cant decline in turnover. For those who were able to reorient them­selves in time, it was ulti­mately just a bend. But how does one then eval­uate this kink? It would not be fair to include only the new busi­ness model in the eval­u­a­tion, as long as the old one still exists and can pick up speed again at any time. Most start-​ups would be very happy if the effects of the Corona measures were simply “factored out”, i.e. if the curve were prac­ti­cally continued and the valu­a­tion applied that would prob­ably have been reached under normal circum­stances at the current time. But it is not only in “Die Höhle der Löwen” that investors are very rarely prepared to do this. And who could blame them, after all, no one can say when and if things will return to “normal”, or whether some sectors of the economy will not have changed perma­nently. Or even consumer behav­iour.

Of course, that’s not fair some­where; after all, this is a situ­a­tion that could not have been prevented by any start-​up in the world. And so one could also compare it to other sales slumps that are completely not one’s fault and that can only be predicted poorly or not at all. But here, too, investors are rarely willing to completely ignore the kink in turnover.

Most, however, settle some­where in the middle between the actual and the would-​be situ­a­tion. The less recom­mend­able ones, however, take advan­tage of the resulting finan­cial pres­sure on the start-​ups to further depress the valu­a­tion.

Of course, this has never been observed with the lions, and the valu­a­tion of Lymb.io could also be under­stood more on the basis of the continued revenue devel­op­ment, which looked very strong espe­cially at the end of 2019. Unfor­tu­nately, we don’t learn anything more about the exact calcu­la­tion, but only see the lions exit with the valu­a­tion justi­fi­ca­tion.

Lymb.io has now even completely replaced “Fun with Balls” as the company name and the home systems are already avail­able for pre-​order.

So let’s keep our fingers crossed that they will end up being one of the start-​ups that only had a bump in growth and a successful tran­si­tion. And that they will thus be able to pursue their mission of finally helping people to move more again for a long time to come.

Photo (above): TVNOW / Bernd-​Michael Maurer