## Hurdle Rate Calculation

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.

## Funding Milestones for a Startup Business

Achieving funding milestones reduces the risks associated with a business and allows it to seek a higher valuation and additional funding from potential investors.

## 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.

## 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.

## Angel Investor Funding for Startups

Angel funding is used to provide a startup business with equity investment to fund growth. The angel investor is seeking higher returns for the risks involved and tries to limit the initial valuation placed on the business in order to maximize their equity percentage.

## Bootstrap Finance and Financial Goals

The availability of finance for a startup business determines its ability to expand and grow. By using bootstrap finance the growth will be slower but the value of the business needed to meet the personal financial goal of the entrepreneur will be smaller.

## Funding Needed to Reach Break-even Point

A business must be able to fund its initial startup losses until it becomes profitable. The funding needed to reach break-even depends on the type of business and the time to profitability.

## Discounted Cash Flow Valuation Calculator

The free cash flow valuation calculator can be used to value the operations of a startup up business. The calculator uses the free cash flow generated by the business and discounts this at its weighted average cost of capital.

## 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.

When early payment discounts are offered by suppliers, the cost of trade credit needs careful consideration as the effective interest rate can be very high compared to other forms of finance.

## Cost of Offering Early Payment Discount

The cost of offering early payment discount to customers needs careful consideration by a startup business as the effective annual rate is normally very high compared to other sources of finance.