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#+title: Section 5 | Lesson 30 - Venture Capital Part 3

* Links
- [[./../mba-main.org][<Back to Main MBA]]
- [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4311466#overview][S05:L30 Venture Capital Part 3]]

* Notes

** topics within the Venture Capital are relevant
1. starting a company
2. new division
3. raising money
4. potential investors
5. creating disruptive ideas

** we are in the third round
- years 3-4

- after this
  - go public
  - break up the company
  - file for chapter 11
  - sell the company

- find your passion
  - you better be doing this because you want to

- VCs want to work with the best management team

** example
- the best management team is the most important
- P.O.C "proof of concept"
- P.O.S. "point of sale"

*** starting point
10,000$ equity
2,000,000 shares

** first round vc

*** company estimated:
time: 5 years
net income: $1mn

*** competitor
valuation: $20mn
net income: $2mn

Price / Earning = $20mn / $2mn = 10 times PE multiple.

*** conclusion
the competitor is worth $20mn now with a $2mn net income, leading us to believe the PE ratio is 10

therefore if the net income is expected to be $1mn in 5 years, then the value of the company should be $10mn

PE * net_income = Value

10 * $1mn = $10mn

** what is the company worth today
- VC expects to make 50% per year
- (Value of Company in 5 Years) / (1 + Percentage Earnings Per Year) ^ (Number of Years)
- $10 mn / (1 + 50%) ^ 5
