EF

Question 1

Maturation Phase

Answer 1

develop and idea concept to functional demonstration model (idea grows up)

takes 3 months to 2 years

Question 2

Incubation Phase

Answer 2

build on demonstration model to prove that their idea can be financially viable. Requires drafting of a business plan. Culminates in the formation of a company.

(before the seed hatches you have to incubate and keep it warm)

9-18 months

Question 3

Seed Phase

Answer 3

commercial launch

12-36 months

Question 4

Consolidation Phase

Answer 4

achieve first sales and break even point

24-48 months

Question 5

Development Phase

Answer 5

profits are achieved

Question 6

Tag Along Rights

Answer 6

AKA co-sale rights
clauses that protect minority shareholders if majority shareholders or other shareholders sell to a 3rd party
the minority shareholders can join the transaction

minority can tag along

Question 7

Drag Along Rights

Answer 7

prevents minority shareholders from refusing to sell their shares to get a higher price or any other reason

drags them along

Question 8

IPO

Answer 8

going public
being listed on a stock market
new equity for company from capital increase
liquidity for shareholders

Question 9

Trade Sale

Answer 9

selling equity to a 3rd party

industrial or financial buyer

Question 10

Internal Growth

Answer 10

use available cash to grow current products and with innovations developed by company’s team

Question 11

External Growth

Answer 11

acquire competitors or complementary business

Question 12

New Equity + Debt

Answer 12

new equity from a private equity fund or a corporate fund

bank loan is easier since company is profitable

Question 13

Break Even Point BP

Answer 13

FC/CM%

Question 14

Cash Flow =

Answer 14

Net Profit + Depreciation

depreciation is a non cash expense

Question 15

Balance Sheet

Answer 15

Assets and Liabilities
at a specific point in time

net assets
inventory 
WIP
customer receivables
cash and market securities
share capital
net profit loss
earning after dividends
loans and financial debt
supplier payables
social and tax debts
other payables and accruals account payables

Question 16

Profit =

Answer 16

revenue - VC - FC

Question 17

CM =

Answer 17

sales - VC

CM% = CM / Sales

Question 18

CLV

Answer 18

average total profit from each customer/ lifetime as customer of company

Question 19

CAC

Answer 19

sales and marketing expense / orders

Question 20

Financial return =

Answer 20

net profit / total equity

Question 21

new shares =

Answer 21

n / n+ existing shares

Question 22

pre money valuation =

Answer 22

(exit value / money multiple) - new equity

Question 23

post money valuation =

Answer 23

share price * total shares

Question 24

share price =

Answer 24

pre money valuation / # of existing shares

Question 25

Cash flow definition

Answer 25

explains how much cash comes in an out during a year. (TUB) 3 types of cash flow operation investing financial cash flows

Question 26

Sensitivity Analysis

Answer 26

helps you measure the impact of changes in some key parameters on your break even point

Question 27

PNL

Answer 27

provides information on your company's ability to generate profit (leaky bathtub) ``` sales and direct costs staff and payroll expenses capex and amortization external expenses gross margin added value EBITDA operating income pre-tax earnings net profit cash flow (cash flow makes the link between PNL and financing plan) other income that doesn't come from company's main business ```

Question 28

discount rate

Answer 28

used to estimate present value of future cash flows compensation for time value of money and risk varies based on company's development stage and risk aversion pv = fv / (1+r)^n

Question 29

Main financial requirements

Answer 29

``` CAPEX WCR changes Cash Flow (negative) Repayments of debt Payment of Dividends ```

Question 30

User break even ratio

Answer 30

CLV/CAC >1 if CAC is > cm then they will go bankrupt

Question 31

Internal Growth

Answer 31

use available cash to grow current products and innovations developed by company's team

Question 32

External Growth

Answer 32

acquire competitors or complementary businesses

Question 33

IPO going public

Answer 33

be listed on a stock market, new equity for company from capital increase, liquidity for shareholders

Question 34

New Equity and Debt

Answer 34

new equity from a PE fund or corporate fund

Question 35

Trade Sale

Answer 35

selling equity to a third party, industrial or financial buyer

Question 36

Ratchet Clauses

Answer 36

allows for an investor to adjust her % of ownership after an additional round of financing with a lower share price (down round) investors try to protect their interests in case of a down round compensate in case of a down round

Question 37

Net Profit =

Answer 37

revenue - expenses