L9 Valuation of Biotech firms

Question 1

Why is a lot of money burned at the start of a biotech business?

Answer 1

• Money burned due to buying equipment, hiring people, setting up trials

Question 2

Define equity.

Answer 2

Ownership interest of shareholders in a corporation
driven by number of shares held by shareholder

Question 3

What is a share?

Answer 3

any of the equal portions into which capital stock of a corporation is divided & ownership of which is evidenced by a stock certifacte

Question 4

What is pecking order theory?

Answer 4

internal funding is preferred over external sources

Question 5

What are 4 people who manage VC fund?

Answer 5

General partners
Portfoli companies
IPO or sale of portfolio companies
Limited partners

Question 6

What are 2 types of VC firms?

Answer 6

ones that want to exit asap or ones that want to remain in company for long term

Question 7

What are 3 rules for VC?

Answer 7

1. Reduce need for external financing
   
   2. Use cheapest financing option available
   3. All investors look for an adequate return given level of risk

Question 8

Define financial valulation

Answer 8

assessment of total financial value of a company/project

Question 9

What is post money?

Answer 9

money you get from shares

Question 10

wHAT IS PREMONEY?

Answer 10

value of company before shares

Question 11

What is the PV?

Answer 11

the cash flow of company at a certain point divided by 1 + discount rate at time at which cash flow occurs

Question 12

What is PV needed?

Answer 12

to assess value of firm & compare to other firms bring all profits that may come up back to today

Question 13

What is the TCV?

Answer 13

sum of all these cash flow