Venture Capital Method (Single Round Financing)

A full model enabling an entrepreneur to understand assumptions of both sides of the table in a single round financing

assumptionsentrepreneurfinancefinancinginvestmentsingle roundstaged investmentunstaged investmentvaluationventure capital

"Objectives of this model:

• Understand how and why staging and other real options affect the values of new venture financial claims

• Value the financial claims of a new venture using either discrete scenario analysis or simulation

• Use financial modeling and valuation techniques to study game theoretic issues that arise for the parties to a new venture

• Evaluate the effects of alternative financial contracts on the values of the financial interests of the entrepreneur and outside investors

• Know how to construct financial contracts to signal information and align incentives"

-> Entrepreneur's Assumptions - Financial Model Based on Business Plan
-> Investor's Assumptions - Financial Model Based on Business Plan
-> Staged Investment Decision Model
-> Valuation of Unstaged Investment - Venture Capital Investor
-> Valuation of Staged Investment - Venture Capital Investor
-> Valuation-based Contracting Model of Ownership Shares
-> Risk and Return of Entrepreneur's Financial Claim
->Valuation of Entrepreneur's Interest in Venture

- Entrepreneurial Finance, by Janet Kilholm Smith, Richard L. Smith and Richard T. Bliss

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