Section outline

  • In this section, we discuss how professional investors such as venture capitalists typically value (startup) companies. This so-called VC approach focuses on the potential value of the firm at a future point in time when the professional investors expect to exit from their investment (typically 5-7 years after the investment). It then compares the resulting valuation with the required capital to determine whether the venture promises to be a financially attractive investment or not.

    • This section's reading assignment and review questions are listed below: