Venture Capital and the Finance of Innovation

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Edition: 3rd
Format: Paperback
Pub. Date: 2021-04-13
Publisher(s): Wiley
List Price: $139.68

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Summary

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.

Table of Contents

PART I VC BASICS

CHAPTER 1 THE VC INDUSTRY 3

CHAPTER 2 VC PLAYERS 21

CHAPTER 3 VC RETURNS 46

CHAPTER 4 THE COST OF CAPITAL FOR VC 65

CHAPTER 5 THE BEST VCs 83

CHAPTER 6 VC AROUND THE WORLD 99

PART II  TOTAL VALUATION

CHAPTER 7 THE ANALYSIS OF VC INVESTMENTS 123

CHAPTER 8 TERM SHEETS 146

CHAPTER 9 PREFERRED STOCK 163

CHAPTER 10 THE VC METHOD 178

CHAPTER 11 DCF ANALYSIS OF GROWTH COMPANIES 195

CHAPTER 12 COMPARABLES ANALYSIS 214

PART III PARTIAL VALUATION

CHAPTER 13 OPTION PRICING 231

CHAPTER 14 THE VALUATION OF PREFERRED STOCK 252

CHAPTER 15 LATER-ROUND INVESTMENTS 272

CHAPTER 16 PARTICIPATING CONVERTIBLE PREFERRED STOCK 290

CHAPTER 17 IMPLIED VALUATION 305

CHAPTER 18 COMPLEX STRUCTURES 320

PART IV THE FINANCE OF INNOVATION

CHAPTER 19 R&D FINANCE 339

CHAPTER 20 MONTE CARLO SIMULATION 357

CHAPTER 21 REAL OPTIONS 378

CHAPTER 22 BINOMIAL TREES 400

CHAPTER 23 GAME THEORY 419

CHAPTER 24 R&D VALUATION 445

APPENDIX A SAMPLE TERM SHEET 466

APPENDIX B THE VCFI SPREADSHEETS 484

APPENDIX C GUIDE TO CRYSTAL BALLs 487

GLOSSARY 512

INDEX 535

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