1. When using the "Market Comparables" method for purposes of valuation, what type of companies are typically analyzed for comparison?
2. StartupX is currently generating $500,000 in ARR. Project Future Revenue in Year 3 using the following assumptions: 75% growth in ARR in years 1 & 2 and 55% growth in ARR in year 3.
3. Market Timing Risk is concerned with what potential consequence if an startup introduces a product at the wrong time?
4. What is the primary focus of valuing early-stage companies (ESCs), given their high level of risk and the investors' Required Rate of Return (ROR)?
5. Why is valuing early-stage companies (ESCs) different from valuing mature businesses using methods like discounted cash flow analysis?
6. Why is the Multiple of Invested Capital (MOIC) considered more important for early-stage investors than the Return on Investment (ROR)?
7. What does the term "Discount Rate" primarily represent in the context of valuation?
8. Why can mathematical calculations for determining ownership and returns be less reliable for early-stage startups?
9. What is the primary challenge related to Team Risk when investing in a startup with a less experienced team?
10. Why is it important to adjust the Present Value when determining the post-money valuation of early-stage companies (ESCs)?
11. Venture Investor A (VIA) is seeking to make $1,500,000 investment in StartupX. VIA has a ROR of 45% and expects to hold the investment for seven (7) years. This translates into a 35% equity ownership. According VIA's calculations, what is the present value (or post money valuation) of StartupX?
12. Which of the following is NOT an example of a Macro Risk that can impact the overall economic and business environment in which an ESC operates?
13. How does Funding Risk in a startup investment affect existing investors if the company is unable to secure the necessary funding?
14. When assessing Liquidity Risk in an investment, what does it mean if a liquidity event takes several years to materialize for an investor?
15. What is the primary purpose of "Transaction Comparables" in the valuation process?
16. Based on the facts below, what equity ownership should the Venture Fund negotiate for (to best insure it achieves its ROR)?
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17. If StartupX has a pre-money valuation of $1,000,000 and receives $500,000 in investment, what is the post-money valuation?
18. What does pre-money valuation represent for a company in the context of a funding event?
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