Homework required in preparation for this lecture
- Try to understand 'valuation'
- Read this article about Dropbox
- Find other articles about that deal
- Read up on the key expressions in the second paragraph: "valuation", "looking to raise $x million"
- Deliverable: A blog post, in your own words, to the best of your ability to explain what that second paragraph means.
- Business Structures
- Finance For Geeks
- Sources of money
- Things to think about when starting a company
- Partnerships, Corporations
- Equity and Stocks
- What's a stock?
- What does it tell you that Google is $450+ / share and BP is $37 / share?
- Is Google 'expensive' or BP 'cheap'?
Finance For Geeks
- "Naive" Finance: How much money will you be spending?
- Why did Fernando think there was something wrong with Hagai's numbers?
- Burn rate, runway and other odd terms
Sources of Money
- "Friends and Family"
- What it sounds like
- What do they get in return
- When is this a good idea or not?
- Seed finance and the many new financing models
- Brandeis "Sprout" Grants
- Incubators of various kinds
- And many others
- Venture Capital
- Investment fund - Rich people/institutions (the Limited Partners)
- Managers of the fund (also rich people :) - The General Partners
- Investment Rounds: Founding -> A-Round -> B-Round .... -> 'Liquidity Event'
- What is it worth?
- Deconstruct: "it" ? What is 'it'?
- Worth? What is $1M worth right now?
- What can else can I do with it
- How much cash can it 'throw off'
- But what about next year, and the year after?
- Unlike money in a bank, it's ability to throw off cash change
- Lingo: Pre-money, Post-money, valuation, etc
- How Valuation changes.
- What does it mean to invest 1.5M for 1/3 of the company?
- What is it worth before the investment?
- What is it worth with the investment?
- Valuation (Pre, Post)
- Don't worry -- it's confusing!
- Cap Table Example
Things to think about if you are thinking of starting a company
- Legal structure
- When is it too early, when is it too late?
- Intellectual Property and issues around that
- Who owns what and what happens when things go sour