1
Q
What is the Trend in Venture Capital Deal size and amounts ?
A
- Increased Capital deployment
- Decreased deals
2
Q
Where does most Capital invested flow? (geographically)
A
- USA (1 in 3$ invested)
3
Q
What are some reasons that the capital deployment increased?
A
- AI is capital intensive
- Bigger deals
- Late Stage Deals to reach IPO-Stage
4
Q
What is the trend in companies IPO’s and staying private?
A
- more companies stay private
- More IPO’s
5
Q
How has the Unicorn Market developed?
A
- Unicorn market has developed
- 40% of unicorns are founded over a decade ago
6
Q
What is the M&A-Trend in the VC Market?
A
- Increased amounts of acquisitions in early stage companies
7
Q
What is the Fundraising trend in the VC-Market
A
- Decreased fund counts
- Decreases in capital raised
8
Q
What stages is the most capital invested?
A
- Seed and early stage
9
Q
What are some VC sector which are hyped right now?
A
- AI
- Defense Tech
- Space Tech
10
Q
What is the trend in Venture Debt?
A
- Rising Venture Debt amounts
- Mostly driven by Tech/AI startups
11
Q
How does Venture debt differ from VC financing?
A
- Specialised providers
- Extended cash runway
- Shorter Time Frame
12
Q
In what legal framework is a VC-Fund usually structured?
A
- Limited Partnership
13
Q
What types of LP`s are there?
A
- Institutional Investors
- Family Offices
- High Net Worth Individuals
- Fund of Funds
14
Q
What does a typical due diligence process look like?
A
- Initial screening
- Detailed due diligence
- Documentation review
- Ongoing monitoring
15
Q
What are some Differentiating factors funds can have?
A
- Unique deal flow (partnerships, scout programs)
- Team advantages (unique backgrounds/expertise)
- Value-add capabilities (hands on, operational)
- Fund terms
- Investment approach (sector, stage)
16
Q
What are the 3 dimensions of LP targeting?
A
- LP Type (risk tolerance, check size, decision timeline)
- Geography
- Strategic Value
17
Q
When looking at Industry trends, what three trends should a fund look for?
A
- Technology Trends (core innovations & adoptions)
- Market Trends (Customer behaviour & Business Models)
- Regulatory Trends (Current & future Regulations)
18
Q
In the Innovation cycle what should funds look for?
A
- Technology S-Curve (cycle stage & Investment Timing)
- Disruption patterns (innovation types & market impact)
19
Q
What is the LP Advisory Committees primary role?
A
- Oversee conflicts and governance
20
Q
What are Endowments
A
Investable assets of non-profits such as Universities
21
Q
Who Pioneered the Endowment Model and what is it
A
- Yale
- Investing leftover capital into PE/VC instead of Stocks etc to gain higher returns
22
Q
What is the clawback cause?
A
- When the final return to LP’s is lower than expected and GPs just return their excess carry
23
Q
What does the IRR measure?
A
- Annualised rate of return considering time
24
Q
What does track record attribution refer to?
A
- Assigning credit for past investments to specific GPs
25
What is TVPI?
Total Vale Paid to Investors
- (DPI + RVPI)/Paid-in Capital
26
What is MOIC
Multiple on Invested Capital
- measures how many times the investors money has grown
27
What is RVPI
Residual Value to Paid-in Capital
- measures the funds unrealised value
28
What is DPI
Distributions to Paid-in Capital
- Measures the realised returns to investors
29
What is the agrtnec hype cycle
- Technology trigger
- Peak of inflated expectations
- Through of Disillusionment
- Slope of enlightenment
- Plateau of Productivity
30
How does Carlota Perez define the frenzy phase of a technological revolution
- Financial speculation and bubbles
31
How is the initial Capital deployed calculated?
2/3 initial 1/3 reserved
32
What is an Evergeen fund?
- Funds without fixed termination cycles
- Recycling returns
--> Especially suitable for deep tech as it needs longer to produce returns
33
What is the recourse based theory?
A theory explaining how VC-funds obtain competitive advantages
34
According to the recourse theory, what does a funds sustained advantage derive from?
- its unique, inimitable internal capabilities and networks
35
Where do most of the deals come from?
- 1. VCs Network (professional networks, other investors, other managers)
- 2. Self generated
-3. Inbound
36
What are some typical sources of referrals
- Executives from portfolio companies
- Former entrepreneurs
- Professionals
37
What is the most important factor for VCs when deal screening?
1. Management Team
2. Fit
3. Product
38
What is the Berkus Method?
- a Pre-revenue valuation approach using a scorecard
39
For the Berkus Method?
- How many dimensions are there?
- What is the maximum valuation per dimension?
- What is the maximum valuation?
- 5 Dimensions, 500k, 2,5M
40
What are the 5 dimensions in the Berkus Method?
- Idea
- Tech
- Team
- Relations
- Traction
41
What is the Scorecard Method?
A more specific weighted version of the burkes method
42
What are the Factors with weight in the scorecard method?
- Team strength (30%)
- Market Opportunity (25%)
- Product/Tech (15%)
- Competitive Environment (10%)
- Marketing/Sales (10%)
- Need for funding (5%)
- Other Factors (5%)
43
How is the scorecard method used?
- Weigh each factor against the norm (0-200%)
- Calculate all factors together
- Calculate obtained percentage times the baseline
44
When is the Berkus Method used?
- Pre-revenue startups
- Almost no Data
- Need quick estimate
45
When is the Scorecard method used?
- When similar companies exists
- Local markets matter
- Team quality crucial
46
How is the Pre-Money Valuation Calculated?
- Investment / % of Ownership acquired
47
How is the Post-Money Valuation Calculated?
- Pre-Money + investment Amount
48
When is Dilution applied?
- When new shares are issued
- Not in grants, debt, or SAFEs before they convert
49
What are the types of Anti Dilution?
- Full ratchet
- weighted Average Dilution
50
How is the new price calculated in the Weightes average anti dilution?
Price old * ( {A+(B/Pnew)} / A + (B/Price old) )
A= existing fully diluted shares
B= Money raised in new round
51
What is the narrow-based weighted average anti dilution?
- same as normal weighted anti dilution but only takes into account certain types of shares in "A" (e.g. only common)
52
What is the effect of narrow-based weighted anti dilution?
- Investor gets more shares than broad-weighted
53
Who is common & preffered stock usually held by ?
- Common --> Founder/team
- Preffered --> INvestor
54
What are the benefits of preferred stock ?
- Downside protection (liquidation preferences)
- Governance protection (board seats)
- Anti-dilution protection
- Priority in exits
55
What are participation rights?
- share in upside plus liquidation preference
56
How is the Pre-Money Valuation calculated?
Post Money - Investment Amount
57
How is ownership calculated?
Investment Amount / Post-Money Valuation
58
What is a SAFE?
Simple Agreement for Future Equity
59
What are the benefits of a SAFE
- No maturity Date
- No repayment obligation
- No interest
- No default risk
60
When is a SAFE converted?
At the next financing round at the post money valuation
61
How is the conversion Price Calculated?
post-money share price * (1 - discount)
or
Valuation Cap / fully diluted shares
62
How are the SAFE shares calculated?
Investment Amount / Conversion price
63
What are advantages of a SAFE ?
- No dilution now
- Faster and Cheaper
- Allows skipping the seed round entirely
64
What are disadvantages of a SAFE
- Dilution may be worse later
- Valuation cap limits upside
- Future investors may react negatively
65
What are some Exit Types?
- IPO
- M&A
- Secondary Sale
- Company Buyback
- Write-off
66
Which is the dominant exit route?
M&A
67
What are the three strategic reasons for M&A?
- Scale (make company bigger in existing market)
- Scope (buy something the company doesn't have so far)
- Speed (accelerate roadmap, beat competition)
68
What other Motives for M&A are there?
- Defensive plays (prevent others from acquiring)
- Platform expansion
69
How does M&A Valuation differ from VC Valuation?
- M&A Valuation is driven by
Standalone value
Synergy value
Strategic value
Competition dynamics
70
What are the three premiums ?
- Control Premium (pay extra for full control)
- Synergy Premium (value from cost savings and synergies)
- Competition Premium (auction dynamics)
71
What is the key difference between the VC and M&A valuation method ?
- VC: What return is needed at exit to compensate for the risk
--> High Risk --> High return --> Low valuation today
- M&A: what is the company worth once it becomes acquired
--> Low risk + synergies --> Much higher valuation
72
What is the Formula for the VC method?
Valuation now= Exit value / (1 + required return)'years
73
What is the Formula for the M&A method?
Valuation = DCF + synergies - integration risk
74
How is the standalone EV calculated in M&A?
Present Value ( Free cash flow )
75
What synergies are there?
Cost synergies
Revenue synergies
76
How is the EV with synergies and net synergies calculated?
PV(FCF improvements due to acquisition)
Synergies - integration costs
77
What is the difference between standalone and strategic value of a company?
- Standalone: value of the company
- Strategic : in the hands of buyer with synergies
78
In the Berkus Method What are evidences increasing the value for ValueProposition/Idea ?
- clearly articulated problem with observable pain
- Well-defined user segmentation with willingness to pay
- Compelling mechanism of value creation
- Early qualitative signals from credible domain experts
79
In the Berkus Method What are evidences decreasing the value for ValueProposition/Idea ?
- Ambiguous problem framing
- Fuzzy multi-segment targeting
- value creation reliant on unlikely behaviour change
- Lack of clarity if solution invest or replaces behaviour
80
In the Berkus Method What are evidences increasing the value for Prototype/Technology ?
- Functional prototype (MVP)
- Proof of Concept experiments validating feasibility
- Early architectural clarity (design, stack decision)
- Developer feedback suggesting realistic build timelines
81
In the Berkus Method What are evidences decreasing the value for Prototype/Technology ?
- Reliance on untested assumptions
- Lack of demonstrable progress
- Dependence on third party components
- Prototype signals higher complexity than assumed
82
In the Berkus Method What are evidences increasing the value for Team Capability ?
- Founders with relevant experience
- Demonstrated ability to ship products or run operations
- Complementary skillset
- Ability to recruit talent or advisors
83
In the Berkus Method What are evidences decreasing the value for Team Capability ?
- Sole founders with narrow expertise
- Lacking skill balance
- High turnover or unclear role allocation
- Internal misalignment
84
In the Berkus Method What are evidences increasing the value for Strategic Relationships ?
- Conversations with potential partners demonstrating interest
- Advisory relationship with experts
- Non-binding expression of interest from distribution partners
- Early discussions with credible investors
85
In the Berkus Method What are evidences decreasing the value for Strategic Relationships ?
- No external relational evidence
- Superficial or generic memoranda of understanding
- Advisors with limited relevance or unclear involvement
86
In the Berkus Method What are evidences increasing the value for Market validation ?
- Early pilot programs or beta testers
- Observable behavioural interest (waitlists,...)
- Repeat usage
- Clear go-to market strategy
87
In the Berkus Method What are evidences decreasing the value for Strategic Relationships ?
- No market interactions
- Assumptions about customer behaviour lacking empirical grounding
- Early test showing weak retention or limited engagement
88
In the berkus Method what is a key principle regarding valuations
- it reflects risk reduction milestones
89
What is Terminal Value?
- The value of all future cashflows after 5y
90
How is the present value calculated?
PV = TV/1+discount`5 + FCF/1+ discount
91
When is the discounted PV meeting the requirements?
When PV > Investment
92
When a Round is raised, at which Valuation (pre or post) is the percentage share of the investment calculated?
Post Money Valuation
93
What does pari pasu mean?
- all shareholders share liquidation proceeds equally
94
What is a cap overhang?
- Uncertainty created by having multiples safes with different caps and discounts
95
What does Stacked mean?
- later Investors have liquidation priority over earlier ones
96
What do SAFEs and Convertible notes convert into?
- preffered shares
97
What does the Key Person clause mean?
- LPs can suspend commitments if a key partner leaves
98
How is MOIC Calculated?
Total Value (unrealised + realised) / Total capital invested
99
How is DPI calculated?
Realised return / Total capital invested
100
How is RVPI calculated?
unrealised return / Total capital invested
101
What is a rolling fund?
- A fund allowing continuous fundraising and flexible commitment schedules
102
What are the two market sizing approaches?
- Top Down (TAM, SAM, SOM)
- Bottom Up (Pipeline Data)
103
What are Carlota Perez Techno-Economic Pradigms ?
Shows have technological advancements reshape economies
- Two Phases
1. Installation Phase
- irruption (emergence of technology)
- frenzy (financial sector floods market creating bubbles)
2. Deployment Phase
- After crisis mass adoption follows
104
How I the share price calculated ?
- Pre money valuation / all shares
105
What is the US IPO market governed by ?
- Securities Act of 1933
- Securities Exchange Act of 1934
- SEC
--> to mitigate information asymmetry between insiders and public investors
106
How can one sell securities on the US Stock Exchange?
- Apple through Form S-1
- Apply for an exemption
107
What is the SECs role?
Ensure clarity, consistency and completeness
108
What is the EU IPO Framework built around?
- The Prospectus Regulation 2017
- National competent authorities (BaFin)
109
What is the MAR
- EU Market Abuse Regulation
- compliance after IPO listing
110
Which accounting standard must US listed companies follow?
Gaap
111
Bocconi Semester 1
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