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Accounting and Finance

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Venture capitalists to spend more on health IT, less on devices this year
Glenn Brandon
1/3/2012
Blog Resource
Summary:

Venture capital investing in health IT is expected to increase, while investing in medical devices and biopharmaceuticals drops, according to a recent National Venture Capital Association survey. Read more about why VCs are favoring health IT companies.

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Venture Capitalists Switch to Startups
1/25/2007
Summary:

VCs increasingly are leaving the industry to become entrepreneurs, yet despite their experience with funding startups, many of them are realizing just how challenging it can be to launch a successful business. The insights gained in entrepreneurship, in turn, provide them with a perspective on what it means to be on the andquot;other sideandquot; of the funding table.

Go To Source (www.mercurynews.com)
Venture Capital: The Right Fit
Lee MieYun
2/1/2002
Article Resource
Summary:

Finding venture capital is a matter of securing the right fit between founder and funder, writes the author. Affinity with a investor helps, such as pursuing groups that finance the type of company that yours is, such as a minority- or female-led firm; also necessary is a plan outlining your company's financial prospects and a pitch for convincing investors that you can execute, the author notes.

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Valuation of Pre-revenue Companies: The Venture Capital Method
Payne William H Bill
7/1/2007
Article Resource
Summary:

This informative piece explains a well-known method that venture capitalists use to determine "post-money valuation," which is a company's valuation at the time of investment. Perhaps more important, it provides valuable insights into why the returns expected by investors are often perceived as "too high" by entrepreneurs.

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Valuation Worksheet
7/1/2007
File Resource
Summary:

During a round of investment in seed- (start-up) and early stage companies, angel investors typically invest from $25,000 to $100,000 each. The round usually totals between $250,000 and $1 million, and the company valuations run from $1 million to $3 million. Collectively, the angels purchase from 20 to 40 percent of a company’s equity and seek a return of 20-30x over five years.

Since the Internet bubble burst, the pre-money valuations of seed-stage companies by venture capitalists have averaged between $1 million and $3 million. Angel investors tend to participate at earlier investment stages than VCs, so pre-money valuations for angel deals nearly always fall into this admittedly wide range. What factors within this range impact the valuation of a specific company?

The accompanying Valuation Worksheet provides entrepreneurs and investors with an empirical basis for deciding if a start-up company should be valued near the top or bottom of the range. It’s not designed to be used for definitive valuation calculations.

The Valuation Worksheet lists major factors and key issues to consider in judging the value of a seed (start-up) company. Note the following features:

  1. The major factors are listed roughly in order of importance.
  2. Each major factor has been assigned a weighted ranking. For example, the “Strength of the Management Team” is worth 30 percent while “Sales Channels” are worth 10 percent. Investors put greater emphasis on the management team and the size of the opportunity than they do other factors.
  3. Within each major factor, the impact of each issue has been assigned a valuation ranking from +++ (very positive) to - - - (very negative), to assist the investor decide the overall weighted ranking to be assigned to the valuation. Some factors, such as the size of the opportunity (scalability) and coachability of the entrepreneur, can be deal killers.

Entrepreneurs can use the worksheet to gain insights into what investors are looking for in a fundable seed-stage company and to identify factors that justify higher pre-money valuations. The worksheet is also a roadmap on how entrepreneurs can improve the fundability of their enterprises and increase the pre-money valuation.

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Using Scorecards With Your Board
10/11/2007
Summary:

A venture capitalist explains how key performance indicators (KPIs) are best compiled and used. They should be straightforward covering financial items and people, probably no more than 20, tied to specific managers, and coordinated by the CFO. Sales should be handled as a separate category.

Go To Source (www.vcconfidential.com)
Using Credit Cards: Watch the Fine Print
Fergerson Wendy
3/1/2007
Article Resource
Summary:

In the first three years of running her printing solutions company, Wendy Fergerson borrowed roughly $60,000 per month on credit cards without paying any interest. Out of that experience, she recommends credit cards as a way to bootstrap a company as long as you pay attention to the details on each card for which you apply.

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Understanding the Numbers
2/21/2007
File Resource
Summary:

There are many ways to read financial statements. This information will add understanding to your own reading of your financial statements.

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Understanding a venture capitalist's process
Levesque Jane
8/16/2012
Blog Resource
Summary:

Securing venture capital can be a guessing game of trying to decide whether an investment will come through or not. Read about how you can work to get a positive answer and how you can tell if the answer may be a negative one.

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Understanding Venture Capitalists
3/20/2007
File Resource
Summary:

This article provides insight into fast growth company potential investors--venture capitalists.

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