SHEB812 Startup Financing and Valuation

Annotation:

The course Startup Financing and Valuation aims to provide basic, theoretical and applied knowledge for thr students about the different types of risk financing depending on the stage of development of the company and the specifics of the industry, their advantages and disadvantages, and the peculiarities of choosing one or another type of financing for start-ups and growing companies. The separate stages in the application and raising of venture capital are considered, as well as the various strategies for the realization of the investment. The methods and approaches for valuation of a start-up business are considered, as well as the preliminary due diligence analysis and the structuring of the deal with the venture capitalist. In the form of cases, case studies of successes and failures of world-famous companies with the participation of venture capital will be considered.

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Business Studies (Joint programme with The University of York)

Lecturers:

Asst. prof. Ralitsa Dimitrova, PhD

Course Description:

Competencies:

Students will be able to:

• Implement the financial instruments needed to create and develop a new business;

• Outline the key factors for the realization of the entrepreneurial idea (structure and content of the necessary documentation for attracting venture capital);

• Analyze the results of the various financial strategies of the company;

• Apply specialized terminology in the field of VC and private equity firms

• Develop models of financial planning of a start-up company;

• Negotiate with a VC investor (pitch);

• Make informed decisions about the preferred outcome of the investment;

• Assess the value of a new business.


Prerequisites:
Finance

Accounting

Types:
Full-time Programmes

Types of Courses:
Lecture

Language of teaching:
English

Topics:

  1. Sources of financing - comparative analysis. Venture capital financing - nature, structure and types of investors in venture capital funds.
  2. Concept for starting your own business . Techniques for generating and evaluating business ideas
  3. Develop a busuness model and a business plan for the idea.
  4. Development of a strategic financial map of a company. Cash flow forecasting, J curves and risk dynamics in the early stages of investment.
  5. Book discussion – Kawasaki,G. Art of the start 2.0
  6. Test
  7. Due diligence analysis and investment risk assessment. The role of the assessment of investment attractiveness in the venture capital cycle.
  8. Valuation of start-up companies. (1) Berkus Approach, (2) Cost-To-Duplicate Approach, (3) Future Valuation Method, (4) the Market Multiple Approach, (5) the Risk Factor Summation Method, and (6) Discounted Cash Flow (DCF) Method.
  9. Basic legal documents of the transaction - letter of proposal, articles of association, term sheet, investment contract, transformation contract, debt financing contract.
  10. Transaction financing (bootstrapping, bridge financing, debt financing). Negative and affirmative covenants.
  11. Test

Bibliography:

1. Berkery, D. Raising Venture Capital for the Serious Entrepreneur, 2008

2. Metrick, A., VENTURE CAPITAL AND THE FINANCE OF INNOVATION, John Wiley and Sons, Inc., 2007

3. Bing, G., DUE DILIGENCE: PLANNING, QUESTIONS, ISSUES, 2007

4. Damodaran, A. Valuing Young, Start-Up and Growth Companies: Estimation Issues and Valuation Challanges.2009

5. Kawasaki, G. The Art of the Start 2.0: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything, Penguin,2015

6. Ries, E. The Lean Startup, Crown Business, 2011