1.7 KiB
1.7 KiB
Section 5 | Lesson 30 - Venture Capital Part 3
Notes
topics within the Venture Capital are relevant
- starting a company
- new division
- raising money
- potential investors
- 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