Both Sides of the Table

MAY 19, 2018

Or if you’re a VC raising from LPs you have to list all of your deals, your investment value, your carrying value, your multiples, your IRRs, TVPIs, DPIs, etc along with net cashflows plus your previous LPAs. These collective sets of documents form the basis of what somebody looking at investing would call “financial due diligence.”

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

David Teten

JANUARY 19, 2021

This causes the cost of capital for Flexible VC, often calculated through IRR (similar to an interest rate), can be higher than that of venture debt or traditional RBI. Typically stable, high margins; repeatable sales model; clear path to profitability; and high growth potential. 20-30% is a common target IRR for investors.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Gust

NOVEMBER 1, 2011

The selling price can be estimated by establishing a reasonable expectation for revenues in the year of the sale and, based on those revenues, estimating earnings in the year of the sale from industry-specific statistics. Based on the Wiltbank Study, investors should expect a 27% IRR in six years. OK…let’s split the difference.

Venture Capital 161

Venture Capital Valuation Pre-Money Valuation Post-Money Valuation 161

Hippoland

NOVEMBER 13, 2016

Companies that exit are valued at whatever the sale is. And, lastly, when companies raise an equity round, there is another investor who has (in theory) done due diligence and assessed that a company is worth a certain amount. A common intermediary milestone for most investors is IRR (internal rate of return) of the fund.

IRR 48

IRR Valuation Portfolio Due Diligence 48

Tim Keane

JANUARY 12, 2010

It also assumes the entire value of the investment is captured for investors at a sale of the company in the time specified in the term-sheet. If you look at the spreadsheet, you will see that the “Required Rate of Return” is expressed as an IRR.   Internal Rates of Return naturally compound, so a 50% IRR is 7.59

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Up and Running

AUGUST 19, 2014

My favorite part of pitching to them was the due diligence process. This will definitely change company dynamics, so it’s important to conduct your due diligence on any investors who are interested in investing capital into your company. I was the CEO of both startups, so it was my job to pitch to the angels.

Angel Investor 161

Angel Investor Technical Review Due Diligence Startup 161

Up and Running

DECEMBER 22, 2015

My personal favorite in the “pure nonsense category” is the IRR, the Internal Rate of Return , something that was interesting for about one hour as part of the MBA curriculum, but which has no relevance in the real world. Angel investors are not impressed by projections of 30-40-50% or more profits on sales.

Angel Investor 60

Angel Investor IRR Software Review Startup 60