M4 Flashcards
1
Q
What is venture capital?
A
- specialized firms who invest in early stage or rapid expansion stage firms
- they have a manager overusing all minority investments
- ex) Telus ventures
2
Q
Value of a business
A
Value of a business = (Net income or net cash flow) x Multiple
Net CF = Net income + depreciation and amortization
3
Q
Characteristics of Successful Venture Capital Investments
A
- Strong management and loyal people
- Demonstrated commitment to business
- Product or service in the forefront of its category
- A defined competitive market niche
- A focused business plan
4
Q
How Venture finance firms rice and value deals
A
Step 1: Define Perceived Risk and Set Target Rate of Return
Step 2: Estimate Value of Business at expected exit time
Step 3: Establish Percentage Ownership for the VC
