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Lecture

Launching New Ventures: How Much Money do You Need?

Description

This lecture covers the financial aspects of launching new ventures, including financial projections, stages of venture financing, sources of financing, and the importance of having a 5-year financing plan. It also discusses the trade-offs and challenges of fundraising.

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Related concepts (18)

Valuation using discounted cash flows

Valuation using discounted cash flows (DCF valuation) is a method of estimating the current value of a company based on projected future cash flows adjusted for the time value of money. The cash flows are made up of those within the “explicit” forecast period, together with a continuing or terminal value that represents the cash flow stream after the forecast period. In several contexts, DCF valuation is referred to as the "income approach".

Venture capital

Venture capital (commonly abbreviated as VC) is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth (in terms of number of employees, annual revenue, scale of operations, etc). Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake.

Free cash flow

In financial accounting, free cash flow (FCF) or free cash flow to firm (FCFF) is the amount by which a business's operating cash flow exceeds its working capital needs and expenditures on fixed assets (known as capital expenditures). It is that portion of cash flow that can be extracted from a company and distributed to creditors and securities holders without causing issues in its operations. As such, it is an indicator of a company's financial flexibility and is of interest to holders of the company's equity, debt, preferred stock and convertible securities, as well as potential lenders and investors.

Forecast period (finance)

In corporate finance, in the context of discounted cash flow valuation, the forecast period is the time period during which explicitly forecast, individual yearly cash flows are input to the valuation-formula. Cash flows after the forecast period are represented by a fixed number - the "terminal value" - determined using assumptions relating to the sustainable compound annual growth rate or exit multiple. There are no fixed rules for determining the duration of the forecast period.

Venture capital financing

Venture capital financing is a type of funding by venture capital. It is private equity capital that can be provided at various stages or funding rounds. Common funding rounds include early-stage seed funding in high-potential, growth companies (startup companies) and growth funding (also referred to as series A). Funding is provided in the interest of generating a return on investment or ROI through an eventual exit through a share sale to an investment body, another trading company or to the general public via an Initial public offering (IPO).

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