Startup Death Valley Curve

The startup valley of death curve or startup J curve plots the cash balance of a business against time. A lean startup business can be identified by the shape of its curve during the bootstrapping period.

WACC Formula – Cost of Capital

The cost of capital for a business is the average of the cost of equity and the cost of debt. The weighted average cost of capital formula (WACC) takes into account the level of debt and equity finance used to fund a business to calculate its true cost of capital.

A leveraged buyout is a business purchase transaction involving the use of debt finance. This free leveraged buyout model Excel calculator can be used to estimate the investor return of an LBO transaction.

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.

Optimum Capital Structure for a Business

The capital structure of a business is the mixture of equity and debt it uses to finance its operations. The optimum capital structure is one which minimizes the weighted average cost of capital and thereby maximizes the valuation of the business.

Convertible Note Calculator

The convertible loan note calculator shows the effect on the capitalization table of new equity investment when this triggers the conversion of a loan note. The calculator takes into account the impact of any discount or cap contained within the convertible loan note agreement.

Convertible Loan Notes

Start-up businesses use convertible promissory notes to raise seed capital finance as they avoid the difficult process need to value the business valuation. The loans are repaid by the issue of new shares to the noteholders.

Cost of Debt Financing

Debt financing is one method of funding a business. The cost of debt financing is the interest and fees paid on the debt which are usually allowable for tax purposes. For this reason, the aftertax cost of debt financing is normally cheaper than the cost of equity financing.

Sustainable Growth Rate for a Startup

The sustainable growth rate calculator formula can be used to calculate whether a business can finance its planned growth from internal sources of finance such as retained earnings, or whether it has to seek additional external finance by issuing new equity or amending its financial leverage.

Crowdfunding and Financial Projections

Crowdfunding is a technique for a business to obtain finance in which small amounts of funding are raised from a large number of people (the crowd). Crowdfunding can be either rewards, debt or equity based depending on the requirements of the business.

Loan Repayment Period Calculator

This loan repayment period calculator works out the number of periods required to repay a loan (PV) assuming periodic repayments (Pmt) and an interest rate (i).