Hi guys:
Can some of your shed some lights on what kind of financial modelling is used and required at VC firms please? Is it mostly simple 3 statement model +DCF, that's it? I guess one would also need to learn how to model fundraising activities (debt, equity, asset sales etc), is that fair to say?
Thank you!
My good friend's a VC - he said unless it's late stage they don't really model. It's much more about meeting people and "getting" them / their ideas.
If you're interviewing for an associate position be aware that you will spend your days meeting teams and that's it.
In terms of reading, I'd say study PGs blog - www.paulgraham.com and read http://www.amazon.co.uk/Term-Sheets-Valuations-Intricacies-Valutions-eb…
Also http://www.amazon.co.uk/Angels-Dragons-Vultures-Simon-Acland/dp/1857885… is a fun read
gl
In addition to financial models to get the multiples, cap table and waterfall of preferences is also done for liquidation analysis.
if tech focused, be familiar with SaaS metrics specifically how churn is discussed in each line of business
it's helpful to understand LTV modeling if working on the consumer side
Thank you so much everyone! I really appreciate your book suggestions and advice on what to focus on! Thanks!
On both the VC and corporate venturing side I've focused on bottoms-up market sizing, product opportunity/roadmap, and the team. These posts by Marc Andreessen sum up why: https://twitter.com/pmarca/status/456680681515413504
Thanks everyone!
industry_to_consulting , thank you for the screenshots, very helpful! Was wondering if you could expand that a bit please--in VC investing, most of the companies wouldn't have Free Cash Flows yet to be studied very closely, right? What financial metrics do VCs usually look at and care about the most? Thanks!
Burn rate.
-If you have a solid management team -who have a sensible strategy -to take a good product -out into a decent sized addressable market
....then the question is how much is it going to cost you to get there.
This is important. You can have all 4 above ingredients for a great growth business, if you low ball the cost by 400k that's an architect and 3 bus devs away from success and you may as well not have bothered.
If you are not sure whether the firm is going to be 10x or 2x in terms of revenue in the next 12 months, Cash Flow prediction seems like a joke.
But it is always good to be familiar with return calculation table.
How to show VC Valuation Modeling Chops (Originally Posted: 03/18/2016)
So, coming from startup sales, the goal is to move from AE to Director of Sales at my little startup I'm at which is doing well (funded by a certain first investor in Facebook) with aims of either going to get an MBA and network in to VC, get into another hot startup as like a VP of Sales then get into VC, etc.
How do I show my financial chops and that I would have the ability to value startups? Any top books or resources in general you'd suggest and ways to show that knowledge when applying to Associate positions, etc.
Just need some career road mapping.
The Ways of the VC (Inside the Minds) is a great intro
Vc valuation modeling is an oxymoron
There was a great comment in a past thread that I will draw on. It wet something to the effect of, "change the sign on EBITDA and multiply by 1000". Had a meeting with a VC this afternoon. One of my partners asked him about modeling and valuation. His response- LOL.
Looking for VC models/pieces on strategic partnerships (Originally Posted: 09/18/2012)
Looking to familiarize myself with venture capital models and any PDF's or other pieces on strategic partnerships that anyone might have. Thanks in advance.
I work at a fund with a dual mandate to make investments that provide both strategically relevance to our LP's as well as solid financial returns. It'd be hard to go into detail without giving away my place of work. PM me if you this is what your looking to learn about and want to try and talk through stuff.
PM sent.
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