METHODOLOGICAL AND LEGAL NOTES

Fortestream is a project created by five professionals whose data are indicated in the WHO WE ARE page and who have decided to put their extensive and documented experience in business management and strategy at the service of Start-Ups and Investors. Fortestream maintains privileged relationships with investors and startups that are effectively linked to those of the individual founders.

WHY FORTESTREAM

The founders of the Fortestream Project have observed and shared that the current fundraising system conducted by most startups does not surpass the third round, and the overall fundraising, even when it reaches the desired ‘goal,’ does not lead to the achievement of the plan’s objectives.

Among all startups, the ones that receive the most funding are typically those considered innovative, thanks to tax incentives that reduce the investment risk for individuals. In most cases, startup founders do not disclose the full amount they need, and the assessment of their financial capital is solely based on known methods, which, although correctly applied, suffer from the fact that the estimates are not accurate or conservative. Instead, they are developed to determine a financial capital whose value allows founders to distribute a smaller percentage of equity at a price (nominal value and premium) often inflated compared to the actual value.

In the opinion of the founders of Fortestream, private investors are not protected in any way because they act based on subjective rather than objective factors, such as trust in the founder, a liking for the business, or because they are influenced by people close to them. Based on these critical issues and thanks to the multi-year experiences and vertical expertise expressed by each Fortestream founder, it was decided to establish the Fortestream Project to create a tool aimed at startups and investors.

For startups, conduct a test that allows Fortestream to “unpack the founders’ dream book” to assess whether the forecasts outlined in the business plan reflect achievable objectives and any (if shared) suggestions on how to revise the plan.

For investors, a concise report on the activities carried out is also expressed as a score independently assigned by Fortestream, reflecting the subjective judgment on the overall analysis conducted. The score therefore represents, on a defined scale, the combination of two separate analyses:

• The first one operates according to evaluation criteria widely used in ‘Best Practice’ and recommended by the Supervisory Authority (CONSOB), through which investors assign

value to the company’s financial capital (Discounted Cash Flow method) or expected cash flows. If the application of this method should prove incompatible with the examined reality, other methods will be used.

The second one (currently found only in the Fortestream method, as explained above) involves an investigation conducted through a questionnaire aimed at examining whether:

• The startup’s request, at the first round, can meet the quantitative market expectations.
• The project as a whole, given that startups rarely cover their initial needs with a single round, can find acceptance among the identified type of investor.
• The experiences, skills, and knowledge of the team can fully leverage the resources obtained as mentioned above.
• The founders have the internal capacity to express the true potential of the project, or if some key personnel need to be sought externally.
• The founders’ choice to turn to the retail capital market (equity crowdfunding) rather than professional investors or vice versa is driven by coherent decisions or different motivations (shared decisions with investors, increased controls, compliance, more stringent reporting deadlines, etc., the lack of definition of an exit strategy reserved for a professional entity).

All the information gathered above, along with that obtainable from investigations conducted by the Commercial Marketing and Strategy Area of the Fortestream team, both online and offline, allows us to ascertain whether the startup team possesses the competence, stability, adequacy, and awareness of general and specific market risks that any new venture encounters. These risks include, for example:

• The reference market and its historical cyclical trends and scalability.
• The potential to reduce the competitive gap compared to existing competitors.
• The vision regarding the potential acceptance of new products by the market.
• It is important to emphasize that Fortestream is an independent project, operates without mandates, and does not manage third-party funds.

DISCLAIMER

For startups, the judgment expressed by the assigned rating is not a guarantee of success. Therefore, if such a judgment falls in the lower range of defined values and the examined startup is willing to modify its plan, Fortestream does not guarantee meetings with “previously positive outcomes”.

For investors, the judgment expressed by Fortestream’s rating does not in any way constitute advice, solicitation, encouragement, or recommendation to invest in a particular initiative.