A startup business needs to set a minimum return rate it will accept on its investment projects. This rate is referred to as the hurdle rate and can be calculated using the Excel RATE function.
Last modified October 11th, 2022
Funding
Funding Milestones for a Startup Business
Startup Death Valley Curve
WACC Formula – Cost of Capital
Business Life Cycle Stages of a Start-up
The business life cycle model uses 4 stages start-up, growth, maturity, and decline to define the different phases a business will experience in its lifetime. Each stage comes with its own characteristics and problems to solve, and the business must determine which stage has been reached in order to be able to plan and forecast effectively.
Last modified July 16th, 2019
Enterprise Value vs Equity Value
Enterprise value (EV) and equity or market value (MV) are two different terms used in the determination of the value of a business. Enterprise value is the value placed on the net operating assets of a business by all stakeholders, whereas equity value is the value placed on all assets of the business less its net debt by equity holders.
Last modified October 7th, 2022
Cost of Preferred Stock for Startups
Series A Cap Table Modeling and Convertible Notes
When a business outgrows the funding provided by angel investors it might seek more substantial investment from a Series A funding round. The Series A round is often a trigger for the conversion of convertible loan notes and an increase in the stock options pool. The Series A capitalization table is used to show the effect on the percentage ownership of a business following these changes.
Last modified August 13th, 2019
Angel Investors Cap Table Modeling
When a business has outgrown funding from family and friends it might seek more substantial investment from business angels to fund for example product development, prototype production and market research. The angel investors cap table is used to show how the current shareholders, including the founders, are diluted by the introduction of this seed investment.
Last modified August 13th, 2019
Pre-Seed Investors Cap Table – Startup
When a business is in its early stages and has perhaps developed an idea but does not yet have a working prototype of its product or traction and revenue, it often needs to be funded by outside investment capital from family and friends or other pre-seed investors. The pre-seed investors cap table can be used to demonstrate how the founders are diluted by the introduction of this outside investment.
Last modified August 13th, 2019
Stock Option Pool – Effect on Cap Table
