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Venture Capital and the Finance of Innovation, 2nd Edition
John Wiley and Sons Ltd, Nov 2010, Pages: 592
The Financial Principles Every Venture Capitalist Needs To Master
In Venture Capital and the Finance of Innovation, future and current venture capitalists will find a useful guide to the principles of finance and the financial models that underlie venture capital decisions. Assuming no knowledge beyond concepts covered in first-year MBA course, the text serves as an innovative model for the valuation of start ups, and will familiarise you with the relationship between risk and return in venture capital, historical statistics on the performance of venture capital investments, total and partial valuation—and more.
New to this edition:
- New co-author: Ayako Yasuda is Assistant Professor of Management at the Graduate School of Management, University of California, Davis and former faculty member in the finance department at the Wharton School of the University of Pennsylvania; prior to her Ph.D. she worked at the Investment Banking Division of Goldman, Sachs & Co.
- New unified treatment of investment decision making combining total valuation and partial valuation analysis.
- New rankings of the “best venture capitalists.”
- New web-based model allowing easy visualisation and valuations of multiple term sheets in a start-up.
- Refined version of “reality-check” valuation model to allow for greater flexibility in growth assumptions.
- Updated risk-return and cost-of-capital calculations.
- Updated industry data showing large changes in venture capital investments since 1999
Key features:
- Innovative model for the valuation of start-ups
- The relationships between risk and return and strategy and finance in venture capital.
- Historical statistics on the performance of venture capital investments.
- Total Valuation: the data and methods used to value a high-growth company.
- Partial Valuation: how to visualise and evaluate the special features of VC transactions such as convertible preferred stock, participating preferred stock, payment-in-kind dividends, and liquidation preferences.
- Framework for modeling investment in 'research and development.'
- Cutting edge techniques such as Monte-Carlo analysis, real options, binomial trees, and game theory.
Professor Reviews:
'This book is an excellent bridge between finance theory and venture capital practice. Metrick presents cutting-edge financial tools, creatively applied to venture capital and R&D investing. It is destined to become the required reading for all students and practitioners in the field.'
—Paul A. Gompers, Eugene Holman Professor of Business Administration & Director of Research, Harvard Business School
'Despite the increasing importance of the venture capital industry, until now there was no reference that could provide practitioners with a specialized grounding in finance. With clear explanations and practical models, Metrick’s book can fill this gap. I enthusiastically recommend this book to all venture capitalists.'
—Ted Schlein, Partner, Kleiner Perkins Caufield & Byers
Also available
Venture Capital and the Finance of Innovation
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