In addition, the best companies compare the negative and positive cash flows over a period of time to determine the net present value (NPV) of planned future marketing spending. MORE

The assumption here is that that increased value is NPV positive based on other potential uses of the capital that you could have gotten up front. I’ve been thinking a little about non-recurring revenue businesses. Particularly, businesses where transactions are large, but infrequent. MORE

NewCo is projecting revenues of $25M in five years, even with a 40% discount rate, the NPV or current valuation comes out to about $3M. MORE

The example he uses is: THE RAISE Investment $500,000 Pre Money $600,000 Post Money $1,100,000 OWNERSHIP Founders 55% Investors 45% EXIT Sale Price $5,000,000 Time 5 years INVESTOR RATIOS ROI 355% Multiple 4.55x IRR 35% NPV @ 10% $828,000 Admittedly that valuation and the resulting ownership causes me to wonder, but the most interesting aspect is that Bob is talking about investing in a much smaller exit, with no future investment planned. MORE

Andrew Chen New here? Check out my list of featured essays How to create a profitable Freemium startup (spreadsheet model included!) MORE

NewCo is projecting revenues of $25M in five years, even with a 40% discount rate, the NPV or current valuation comes out to about $3M. MORE

Download of_angel_investors_npv_and_irr.pdf. Download of_angel_investors_npv_and_irr.pdf. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Managing Investor Relationships | Main. Reduce Your Startup Risk » July 06, 2006. Whos Who of Angels. This is an interesting article from todays VC Experts website (vcexperts.com) that they forwarded to me. MORE

In this case receiving 6 texts has a PPV of 26% and an NPV of 93%. What’s more, an NPV of 93% means that people not exhibiting this behavior are almost definitely going to churn, lending further evidence to the need to get people receiving the texts. William A. MORE

Don’t forget that long after you forget the CAPM pricing model, how to do regression analysis or how to calculate NPV without a spreadsheet – your network should endure. This is part of my ongoing series called “ Start-up Lessons.&#. MORE

In economic valuation, past cost can never be a factor for arriving at a value, and formulas such as NPV (net present value) will never take into account money which has already been spent. Einstein once said, “Common sense is the collection of prejudices acquired by age eighteen.&# Common sense, Einstein was arguing, can often be the enemy of rationality, science, and fact-based decision-making. MORE

NewCo is projecting revenues of $25M in five years, even with a 40% discount rate, the NPV or current valuation comes out to about $3M. MORE

NewCo is projecting revenues of $25M in five years, even with a 40% discount rate, the NPV or current valuation comes out to about $3M. Image via eHow.com. MORE

In economic valuation, past cost can never be a factor for arriving at a value, and formulas such as NPV (net present value) will never take into account money which has already been spent. EDITOR’S NOTE: We originally published this post back in 2010. MORE

In addition, the best companies compare the negative and positive cash flows over a period of time to determine the net present value (NPV) of planned future marketing spending. MORE

Income-based valuations consider aspects like CAPM (capital asset pricing model), IRR (internal rate of return), NPV (net present value), WACC (weighted average cost of capital), NCF (net cash flow), and GAAP (generally accepted accounting principles). MORE