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Accounting and Finance

155 results found

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Hurricane Drives Interest in Online Backups
5/1/2007
Summary:

Whether it's to protect against a natural disaster, fire, or theft, backing up a companies electronic files is a necessity. Online backup services provide storage of valuable information at a location separate from the entrepreneur's company.

Go To Source (news.zdnet.com)
Creating a Profit and Loss Statement
6/1/2007
Summary:

This tool examines the process of developing an income statement and explains the meaning of the components of an income statement. When you are finished with this article, your understanding of income statements will give you greater insight into your company's growth and financial health.

Go To Source (www.regions.com)
Letter of Intent: Form of Consideration
6/1/2007
Summary:

When selling your company be sure you understand the offering price might not match the value of your company and the deal is probably more complex than it seems. Pitfalls include nature of a stock deal, stability of the purchasing company, and tax implications. Best advice: Cash is still king!

Go To Source (www.feld.com)
Managing Your Cash Flow
6/4/2007
Summary:

This tool provides a detailed look into the various sections of a cash flow statement. It also describes two methods used to calculate cash flow from operating activities, indirect and direct with examples that will give you an edge when it comes time to preparing a cash flow statement of your own.

Go To Source (www.regions.com)
Fundability and Valuation of Startups: An Angel's Perspective
Payne William H Bill
7/1/2007
Article Resource
Summary:

Numerous factors affect how angels value a company. Primary are the strength of the management team and the size of the opportunity, or a company's potential to scale. Accompanying this article is a valuation worksheet that entrepreneurs can use to better understand what investors look for and to identify factors that can justify higher pre-money valuations. Investors will find it useful to compare companies and determine whether valuation should be higher or lower.

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Investment Valuations of Seed- and Early-Stage Ventures
Villalobos Luis
7/1/2007
Article Resource
Summary:

This exceptional article offers insightful explanation and key details of how angel investors determine valuations, why entrepreneurs and investors often have different perspectives for angel returns, and what steps angels and entrepreneurs can take to quickly find common ground on this critical topic.

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Startup Pre-money Valuation: The Keystone to Return on Investment
Payne William H Bill Villalobos Luis
7/1/2007
Article Resource
Summary:

Investing in seed and startup companies is extremely risky: Angel investors typically realize about 85 percent of their total portfolio returns from 15 percent of their portfolio companies. Consequently, angels look only for companies that can grow rapidly. Entrepreneurs who pursue less aggressive growth are unlikely to attract angel investors.

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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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Financial Leadership Saves Money
7/12/2007
Summary:

You might not see accounting as the most interesting part of your growing business, but it is critical to success. If you don't want to be the CFF (Chief Firefighter), bring the right financial leadership on board sooner, not later.

Go To Source (www.inc.com)

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