An invaluable resource for current and aspiring venture capitalists, Venture Capital and the Finance of Innovation provides an in-depth understanding of the tools and models needed to succeed in this competitive and highly fluid business environment. Building on a comprehensive introduction to fundamental financial and investment principles, the text guides the reader toward a robust skill set using total and partial valuation models, risk and reward, strategic finance, and other concepts central to any venture capital investment.
Cutting-edge predictive and analytical software is presented in conjunction with sophisticated modeling and the latest industry data, illustrating the market’s enormous shift over the last two decades. Engaging discussions on topics ranging from valuation models to strategic decision-making help develop the successful investor’s critical knowledge base, while building a solid foundation of fundamental VC concepts. Accessible, comprehensive, and assuming only basic knowledge of venture capital, this text offers essential guidance for successful VC investing in any market.
- Covers the changed landscape of VC investments (incubators and private IPOs)
- Summary of new research findings and statistics on angels, crowdfunding platforms, corporate venture capital, accelerators, and incubators
- Updated best VCs list including emerging top firms
- Updated term sheet, particularly for (i) convertible notes for pre-valuation round, and (ii) late-stage investments involving non-traditional participants (e.g., mutual funds)
- Updated historical VC returns and cost of capital
- Summary of new research findings and statistics on international VC and global R&D market
- Presents an innovative model for accurate start-up valuation as well as a framework for modeling R&D investment
- Explores the link between risk and return in venture capital, and shows how historical data is used to track and predict trends and performance
- Explains the concepts, methods, and data involved in total and partial valuation, including VC special features such as convertible preferred stock, participating preferred stock, payment-in-kind dividends, and liquidation preferences
- Introduces general finance principles and demonstrates how financial models impact capital investment decisions
- Demonstrates the use of advanced techniques including Monte Carlo analysis, real options, binomial trees, and game theory