M3-S7 - Session notes - Revision history

Dirkjan at 19:58, 27 August 2020

2020-08-27T19:58:28Z

Dirkjan: Replaced content with "M3-S7 - Session notes Category:mbi"

2020-08-27T19:19:38Z

Replaced content with "M3-S7 - Session notes Category:mbi"

Dirkjan: Created page with "Risk / Return triangle * Probability of loss * Expected return * Investor(s), Entrepreneur(s), Combination, Fit, Agreement Debt financing: Debts (& factori..."

2020-08-25T08:02:21Z

Created page with "Risk / Return triangle * Probability of loss * Expected return * Investor(s), Entrepreneur(s), Combination, Fit, Agreement Debt financing: Debts (& factori..."

New page

Risk / Return triangle
* Probability of loss
* Expected return
* Investor(s), Entrepreneur(s), Combination, Fit, Agreement

[[Debt financing|Debt financing]]:
Debts (& factoring)
* Repayment plus interest income
* Provider's upside return
** Usually agreed upon percentage
* Provider's downside risk
** Everything

Positives:
* Retain control
* Greater ange of flexibility
* Lower cost than [[Equity financing|Equity financing]]
* Simpler for both parties to exit
Negatives
* Interest payment
* Cash flow implications
* Assets encumbered
* Personal surety
* Potential personal liquidation

[[Equity financing|Equity financing]]:
* Value of equity stake plus divident income
* Provider's upside return
* Provider's downside risk
* Multiple solutions possible:
** Combination of debt + equity
** Possibilities to convert it later

Positives:
* Low/no cash flow implications
* Lower personal risk
* Potential non-financial contribution of investors
Negatives:
* Loss of control
* Costly in long term
* Difficult / costly to exit
* M&A risks

Finance and business stage:

The American way (no debt financing)
<html>
<img src="http://upload.wikimedia.org/wikipedia/commons/thumb/8/8e/Startup_financing_cycle.svg/700px-Startup_financing_cycle.svg.png" "Width=400px"/>
</html>

VC Rates of return
* In the 25% range over 5-8 years

Split of the spoils:
* 80% to limited partners, 20% ROI
* 20% to general partners - <math>6M over 5 years</math>

Evaluation process:
* Universal independent market analysis, Opportunities evaluation
* Technical due diligence
* Team due diligence

What characteristics desired in the team?
* Strong technologist, engineering vision & execution, attention to the minutae
* Seperate person to drive sales, finance, recruitmet
* Ware of individuals wedded to a particular role
* Willingness to step aside for a new CEO, professinoal managers
* A CEO to take it to glory
* The quality of people the CEO can attract
[[Category:mbi]]

← Older revision		Revision as of 19:19, 27 August 2020
Line 1:		Line 1:
−	~~Risk / Return triangle~~	+	M3-S7 - Session notes
−	* Probability of loss
−	* Expected return
−	* Investor(s), Entrepreneur(s), Combination, Fit, Agreement
−
−	~~[[Debt financing\|Debt financing]]:~~
−	~~Debts (& factoring)~~
−	* Repayment plus interest income
−	* Provider's upside return
−	** Usually agreed upon percentage
−	* Provider's downside risk
−	** Everything
−
−	~~Positives:~~
−	* Retain control
−	* Greater ange of flexibility
−	* Lower cost than [[Equity financing\|Equity financing]]
−	* Simpler for both parties to exit
−	~~Negatives~~
−	* Interest payment
−	* Cash flow implications
−	* Assets encumbered
−	* Personal surety
−	* Potential personal liquidation
−
−	~~[[Equity financing\|Equity financing]]:~~
−	* Value of equity stake plus divident income
−	* Provider's upside return
−	* Provider's downside risk
−	* Multiple solutions possible:
−	** Combination of debt + equity
−	** Possibilities to convert it later
−
−	~~Positives:~~
−	* Low/no cash flow implications
−	* Lower personal risk
−	* Potential non-~~financial contribution of investors~~
−	~~Negatives:~~
−	* Loss of control
−	* Costly in long term
−	* Difficult / costly to exit
−	* M&A risks
−
−	~~Finance and business stage:~~
−
−	~~The American way (no debt financing)~~
−	~~<html>~~
−	~~<img src="http://upload.wikimedia.org/wikipedia/commons/thumb/8/8e/Startup_financing_cycle.svg/700px~~-~~Startup_financing_cycle.svg.png" "Width=400px"/>~~
−	~~</html>~~
−
−	~~VC Rates of return~~
−	* In the 25% range over 5-8 years
−
−	~~Split of the spoils:~~
−	* 80% to limited partners, 20% ROI
−	* 20% to general partners - <math>6M over 5 years</math>
−
−
−	~~Evaluation process:~~
−	* Universal independent market analysis, Opportunities evaluation
−	* Technical due diligence
−	* Team due diligence
−
−	~~What characteristics desired in the team?~~
−	* Strong technologist, engineering vision & execution, attention to the minutae
−	* Seperate person to drive sales, finance, recruitmet
−	* Ware of individuals wedded to a particular role
−	* Willingness to step aside for a new CEO, professinoal managers
−	* A CEO to take it to glory
−	* The quality of people the CEO can attract
	[[Category:mbi]]		[[Category:mbi]]

← Older revision		Revision as of 19:58, 27 August 2020
Line 1:		Line 1:
−	M3-S7 - ~~Session notes~~	+	Risk / Return triangle
		+	* Probability of loss
		+	* Expected return
		+	* Investor(s), Entrepreneur(s), Combination, Fit, Agreement
		+
		+	[[Debt financing\|Debt financing]]:
		+	Debts (& factoring)
		+	* Repayment plus interest income
		+	* Provider's upside return
		+	** Usually agreed upon percentage
		+	* Provider's downside risk
		+	** Everything
		+
		+	Positives:
		+	* Retain control
		+	* Greater ange of flexibility
		+	* Lower cost than [[Equity financing\|Equity financing]]
		+	* Simpler for both parties to exit
		+	Negatives
		+	* Interest payment
		+	* Cash flow implications
		+	* Assets encumbered
		+	* Personal surety
		+	* Potential personal liquidation
		+
		+	[[Equity financing\|Equity financing]]:
		+	* Value of equity stake plus divident income
		+	* Provider's upside return
		+	* Provider's downside risk
		+	* Multiple solutions possible:
		+	** Combination of debt + equity
		+	** Possibilities to convert it later
		+
		+	Positives:
		+	* Low/no cash flow implications
		+	* Lower personal risk
		+	* Potential non-financial contribution of investors
		+	Negatives:
		+	* Loss of control
		+	* Costly in long term
		+	* Difficult / costly to exit
		+	* M&A risks
		+
		+	Finance and business stage:
		+
		+	The American way (no debt financing)
		+	<html>
		+	<img src="http://upload.wikimedia.org/wikipedia/commons/thumb/8/8e/Startup_financing_cycle.svg/700px-Startup_financing_cycle.svg.png" "Width=400px"/>
		+	</html>
		+
		+	VC Rates of return
		+	* In the 25% range over 5-8 years
		+
		+	Split of the spoils:
		+	* 80% to limited partners, 20% ROI
		+	* 20% to general partners - <math>6M over 5 years</math>
		+
		+
		+	Evaluation process:
		+	* Universal independent market analysis, Opportunities evaluation
		+	* Technical due diligence
		+	* Team due diligence
		+
		+	What characteristics desired in the team?
		+	* Strong technologist, engineering vision & execution, attention to the minutae
		+	* Seperate person to drive sales, finance, recruitmet
		+	* Ware of individuals wedded to a particular role
		+	* Willingness to step aside for a new CEO, professinoal managers
		+	* A CEO to take it to glory
		+	* The quality of people the CEO can attract
	[[Category:mbi]]		[[Category:mbi]]