New FCs

Question 1

How many patents were brought in by Yaqrit?

Answer 1

5

Question 2

In what form did Yaqrit’s money first come in?

Answer 2

As a convertible loan agreement (loan that converts into shares once the next money comes in with an investor agreement)

Question 3

What is the hurdle rate for riskier projects? Why?

Answer 3

Riskier projects have higher hurdle rate to compensate for increased level of risk present
This is because the hurdle rate must represent appropriate compensation to the level of risk present

Question 4

What is Hurdle Rate equal to

Answer 4

Break Even Yield

Question 5

What does discount rate i account for

Answer 5

Risk (only considered by VCs, not economists)
Opportunity cost
Inflation

Question 6

Do short term or long term bonds have higher yield?

Answer 6

Long term bonds have higher yields, because interest rates usually tend upwards in the future

Question 7

What can happen to patent ownership?

Answer 7

It can be bought, sold or licensed

Question 8

What is the Paris Convention?

Answer 8

With regard to patent filing
You can now file a priority application at T=0
This gives investors more time to get more money, while having already put in a patent application to protect themselves from prior art

Question 9

When is your last chance to add any missing info to a patent application?

Answer 9

at T=12

When you file for International Application

Question 10

When do you need to have all your money ready during patent application timeline?

Answer 10

At T=30
When you convert international application to national applications, and you need to pay fees to each country you have selected.

Question 11

What is more important, use of funds or sales forecast?

Answer 11

USE OF FUNDS
Because it involved understanding the current market
Sales forecasts can be easily demolished because they are too far in the future

Question 12

What is the difference between patentability and freedom to operate?

Answer 12

Patentability depends on all prior art;
Freedom-to-operate depends on the prior art in the
form of other patent

Question 13

What is a down round

Answer 13

When a company offers additional shares for sale at a lower price than had been sold for in the previous financing round.
More capital is needed and the company discovers that their valuation is lower than it was prior to the previous round of financing

Question 14

Up round

Answer 14

Round of investing where company valuation has increased, so value of shares has also increased

Question 15

How do VCs make a profit?

Answer 15

By selling shares either:

• When company exits (is sold) to a larger company
• When the company enters the public stock market, and shares can be traded there

Question 16

When do VCs buy equity? What type of equity do they buy?

Answer 16

They buy PRIVATE EQUITY (traded on private market)

Question 17

What is the aim of a CARRY? why is it important?

Answer 17

It incentivised VC managers to make high financial return
It incentivises VC managers to make high returns
This is because investors are hands off, passive > they need to keep the VC managers motivated

Question 18

How would a high risk startup keep you motivated to work there?

Answer 18

Give you options (opportunity to buy shares of company at reduced price)
This will keep you focused in making the startup succeed

Question 19

How do you valuate your company?

Answer 19

No set way 
Look at what the market is willing to pay 
Base valuation on: 
- Grant funding 
- Potential (revenues)
- Risk involved

Question 20

What is the difference between going after angel funding and crowdfunding?

Answer 20

Angel funding: state how much you are eligible for, then individually negotiate
Crowdfunding: need to present a value

Question 21

How do you know what to value the company at each round of investment?

Answer 21

You do not want dilution to be greater than 30%

Value company subsequently

Question 22

What is liquidation?

Answer 22

When a business comes to an end and distributes its assets to claimants, as it can no longer pay its obligations (it is insolvent)