Budget your startup expenses, perform valuations and understand the dilution
implications on your ownership at different stages of fundraising.
Beta is a measure of the volatility of a stock relative to the market. By definition the “market” has a Beta of one. So a stock with a Beta above 1 is considered to be more volatile than the market and a stock with a Beta of less than 1 is considered to be less volatile. A negative beta implies inverse correlation with movement of the stock market.
CAPM stands for Capital Asset Pricing Model. It is used to compute a company's cost of equity, which is the return a company pays to its equity investors to compensate them for the investment risk they undertake.
WACC stands for Weighted Average Cost of Capital. A company can have equity shareholders and debt holders. WACC is an average rate that a company is expected to return to all its security holders. It takes into consideration the relative weights of each capital structure component.
DCF stands for Discounted Cash Flow. Under this form of valuation, one makes projections on what a company’s cash flows would be for up to 5 years in the future, and then gets a present value of these cash flows. The sum of these present values provides the net present value for a company. This net present value is what denotes a company’s valuation.
A Comparable Analysis or Relative Valuation helps to analyze a company’s performance against its closest competitors, to get an understanding of its merit.
Precedent transactions analysis is based on the premise that the value of a company can be estimated by analyzing the prices paid by purchasers of similar companies under identical circumstances.
Identify your entrepreneurial buildup. Take the cognitive test to figure out your unique skills as an entrepreneur.
When starting a new business, it is critical to determine your budgetary needs. To determine how much seed money you need to start, you must estimate the costs of doing business for the first couple months.
When a capital provider invests cash into a startup company in exchange for equity, the startup's value immediately before the funding is called 'pre-money valuation' while the startup's value immediately after the transaction is called 'post-money valuation'. Perform these and similar analysis, that will make to pitch confidently to a Shark!
Time Value of Money is probably the central concept in finance theory. TVM helps us realize that a dollar today is worth more than a dollar tomorrow, since we can invest the dollar today and earn a return on it to make it worth more tomorrow.
Leverage an extensive glossary to learn about important concepts related to entrepreneurship and corporate finance. Eaach conept has an explanation and a graphic used to aid learning.
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