Outreach Networks: First Venture Round

2017 ◽  
pp. 1-7
Author(s):  
Susan Chaplinsky
Keyword(s):  
Venture Capital ◽  
Cash Flow ◽  
Private Equity ◽  
Early Stage ◽  
Venture Capitalist ◽  
Entrepreneurial Finance ◽  
Discounted Cash Flow ◽  
Start Up ◽  
Excel File

OutReach Networks is taught in Darden's Entrepreneurial Finance and Private Equity elective. A teaching note for this case is available for instructors as well as an Excel file for student analysis. This introductory case explores the venture capital (VC) and discounted cash flow (DCF) methods of valuing early-stage companies. OutReach Networks is an unusual start-up company in that it was profitable early in its development and did not have to seek VC funding to support its growth. The company has grown quickly and may soon be a candidate for an IPO. In November 2011, an experienced venture capitalist approaches the founder with an offer to invest $30 million in exchange for 30% of the company. While the founder sees some benefit from the VC's experience in preparing the firm for an IPO and the funding enabling it to scale more quickly, he cannot understand how the VC has arrived at this offer. The founder believes the funding should be worth no more than 15% of his firm. Potential reasons for the disagreement over the valuation are (1) differences in the founder's and investor's view of the company's risk, (2) disagreement over the appropriate set of comparable companies, and (3) differences in the methods used to calculate the percentage equity stake. The case is appropriate for use in courses covering entrepreneurial finance or venture capital.

Venture capital and private equity industry in Hungary

2013 ◽  
Vol 63 (1) ◽  
pp. 23-42 ◽  
Author(s):  
Judit Karsai
Keyword(s):  
Venture Capital ◽  
Small Businesses ◽  
Private Equity ◽  
Western Europe ◽  
Stock Exchange ◽  
Debt Crisis ◽  
Early Stage ◽  
Government Interventions ◽  
Business Plans ◽  
Start Up

Hungary represents the second most developed venture capital and private equity (VC&PE) market in Central and Eastern Europe. This article is based on a detailed survey of the entire VC industry between 1989–2010. It demonstrates that while there was a relatively strong correlation between the allocation of capital to VC&PE funds and the capital flow into the Budapest Stock Exchange, the changes in investment activities were closely related to election years. Investments had been hampered primarily not by the shortage of capital, but by a lack of demand and attractive business plans. The article illustrates the different roles and approaches of global, regional and country VC&PE funds in Hungary. It points out that VC investments hardly satisfied their principal function or mission, namely to support innovative start-up and small businesses. Government interventions in the VC market proved to be ineffective as well. Similarly to the whole region, the Hungarian market profited from a transitory situation in the case of high-value PE transactions between 2007 and 2008, at the beginning of the crisis, when the investment problems in Western Europe had yet not extended to the CEE region. From 2009 onward, however, the crisis has resulted in a drop in investments despite the significant amount of uninvested capital accumulated in recent years. As to the prospects for 2013, the early-stage VC segment in Hungary is expected to flourish owing to the Jeremie funds, while the high-value buyout segment of the market will suffer from both the euro zone debt crisis and the loss of transparency in economic policy.

In-Fusion, Inc.

2017 ◽  
pp. 1-4
Author(s):  
Susan Chaplinsky
Keyword(s):  
Venture Capital ◽  
Cash Flow ◽  
Real Option ◽  
Early Stage ◽  
Technical Note ◽  
Option Valuation ◽  
Discounted Cash Flow ◽  
The Real ◽  
Biotech Company ◽  
Real Option Method

This case is designed as an introductory exercise to familiarize students with several methods used to value early-stage companies. The value of a young biotech company is compared under the venture capital (VC), discounted cash flow (DCF), and real option methods of valuation. Students are asked to value the firm under the VC and DCF methods and then compare those values to the value obtained under the real option method. It is suggested that the student spreadsheet (UVA-F-1584X) be assigned in advance of the class with instructions to have students value the firm under the VC and DCF methods. A separate worksheet in the file (which can be hidden at the instructor's discretion) provides the option valuation for later discussion purposes. A technical note, “Valuing the Early-Stage Company” (UVA-F-1471), covering the basics of the VC and DCF methods of valuation can be assigned with the case.

scholarly journals Private Equity and Venture Capital – Preamble

2021 ◽  
Vol 8 (S1-Feb) ◽  
pp. 133-137
Author(s):  
Palash Khatri ◽  
V R Sudindra
Keyword(s):  
Venture Capital ◽  
Private Equity ◽  
Stock Exchange ◽  
Early Stage ◽  
Management Support ◽  
Market Returns ◽  
Stock Market Returns ◽  
Public Market ◽  
Start Up ◽  
Capital Funding

Private equity investment can offer very strong returns in comparison to any stock market returns or public market investment opportunity.Private equity invests in companies which are not listed in the recognized stock exchange. Every business comes across six stages of the life cycle which include; Development, Start-up, early-stage growth, expansion, maturity, and decline/crisis stage. PE firms invest in the initial three stages. In today’s fast-moving world with technological changes very great business plan may hit by various events and successes of companies. Private equity not only invests in companies, but they also provide management support and assist in the overall success of companies. The present study discussed on Birth of US Private equity, Indian Private Equity major players, steps in venture capital funding.

scholarly journals Private equity and venture capital in South Africa: A comparison of project financing decisions

2013 ◽  
Vol 16 (3) ◽  
pp. 258-278 ◽  
Author(s):  
David Portmann ◽  
Chipo Mlambo
Keyword(s):  
South Africa ◽  
Venture Capital ◽  
Private Equity ◽  
Venture Capitalists ◽  
Project Financing ◽  
Financing Decisions ◽  
Start Up ◽  
Risk Appetite ◽  
Investment Opportunities ◽  
Venture Capital Firms

This paper investigates the manner in which private equity and venture capital firms in South Africa assess investment opportunities. The analysis was facilitated using a survey containing both Likert-scale and open-ended questions. The key findings show that both private equity and venture capital firms rate the entrepreneur or management team higher than any other criterion or consideration. Private equity firms, however, emphasise financial criteria more than venture capitalists do. There is also an observable shift in the investment activities away from start-up funding, towards later-stage deals. Risk appetite has also declined post the financial crisis.

scholarly journals PRIVATE EQUITY MARKET IN THE ECOSYSTEM OF START-UPS AND SME SECTOR – PART 1

2020 ◽  
Vol 49 (49) ◽  
Author(s):  
Tadeusz Waściński ◽  
Anna Dudkowska ◽  
Jevgenijs Kurovs
Keyword(s):  
Venture Capital ◽  
Private Equity ◽  
Eastern European ◽  
The European Union ◽  
Investment Funds ◽  
Legal Form ◽  
Investment Companies ◽  
Start Up ◽  
Polish Economy ◽  
Start Ups

Private Equity (PE)/Venture Capital (VE) Funds cover medium and long-term transactions on the private enterprise market. They adopt a legal form of closed-ended investment funds or more and more appreciated alternative investment companies, which contribute to a development of innovativeness in the Polish economy, supporting enterprises on each level of their expansion. Over the last years, there has been an increased value of investment reported among the European PE funds. Poland’s share in the Central and Eastern European (CEE) investments has been the highest in the region and does not fall below 46%. Moreover, more than a double increase of domestic PE investments in 2017 is an opportunity for improving one of the lowest innovation indexes in the European Union. An important role in this matter also belongs to the growing power of start-up ecosystem. It is not without significance that there is a growing awareness of start-ups cooperating with funds, which is defined e.g. by a stronger position of investor or a limited possibility to negotiate the terms of investment agreements. The aim of this article is to present the PE market and its meaning in the development of young companies. Showing in the first part of the article statistics related to management of venture capital in Poland compared to Europe and the CEE will identify tendencies in development of the Polish PE market. It will also allow estimating Poland’s chances for improving its position in the innovative European ranking and increasing Poland’s competitiveness on the international level. Emphasising the importance of startup’s education in dealing with VC funds in the second part of the study will additionally highlight the essence of their cooperation in terms of professionalization of the PE market and a growth of the country’s innovativeness.

Private Equity and Distressed Debt Funds Emerging Role in Preventing and Participating in Restructurings

2017 ◽  
Author(s):  
Christopher Mallon ◽  
Shai Y. Waisman ◽  
Ray C. Schrock
Keyword(s):  
Private Equity ◽  
Early Stage ◽  
Leveraged Buyouts ◽  
Subordinated Debt ◽  
Investment Activity ◽  
Track Record ◽  
Development Cycle ◽  
Start Up ◽  
Wide Range ◽  
A Company

Private equity (‘PE’) investment and distressed debt investment covers a wide range of investment activity by pooled investment vehicles (ie, funds) in privately or publicly (through ‘take-private’ transactions or IPO’s) owned companies, using capital raised from institutional investors that are limited partners of the funds. Such investment activity can be broadly categorized according to the point at which the investment is made within the typical development cycle of a company: (i) initial venture capital provides seed capital for start-up businesses; (ii) growth capital assists early-stage companies with the growth of their operations; (iii) mezzanine financing, comprising the contribution of subordinated debt or preferred equity, provides further capital to more established businesses; (iv) leveraged buyouts (‘LBOs’) are pursued to acquire portfolio businesses with a proven track record of sales and financial performance; and (v) distressed debt investing (the focus of this chapter) which provides support to companies that are in financially precarious positions.

Soliton Technologies – financing growth in uncertain times

2012 ◽  
Vol 2 (6) ◽  
pp. 1-18
Author(s):  
Rajan A. Thillai
Keyword(s):  
Venture Capital ◽  
Learning Outcomes ◽  
Family Business ◽  
Private Equity ◽  
Business Models ◽  
Global Financial Crisis ◽  
Early Stage ◽  
The United States ◽  
Subject Area ◽  
Content Type

Subject area Venture capital and private equity. Study level/applicability This case is suitable for II MBA/Executive MBA (venture capital and private equity/entrepreneurship/business models/managing family business) courses. Case overview Soliton is a technology and software services company with operations in India and the USA providing machine vision products and virtual instrumentation services. Soliton was started by Ganesh Devaraj in 1998 after his return from the United States after higher studies. Ganesh hails from a business family in Coimbatore that had interests in the textile spinning sector. The family had been in the textile business since the early 1940s and had revenues of Rs 400 million and employed about 700 people. Ganesh, not wanting to continue in the traditional family business, ventured into the technology sector using his academic and professional experience. His family was supportive of his venture and funded his company for the first two years of operation and for scaling up operations. Ganesh is now evaluating various sources of raising additional capital at a time when there was general slowdown in the automobile sector as a result of the global financial crisis. Expected learning outcomes The goal of this case study is to illustrate the complexities that exist in financing growth of companies in uncertain times. This following are the expected learning outcomes: discuss and understand the nuances between different sources of early stage funding: personal wealth, family, and angels; compare and contrast the differences between family funding and venture funding; and highlight the benefits and limitations of family funding. Supplementary materials Teaching notes are available.

scholarly journals Nurturing a Venture: A Venture Capitalist's Perspective

2003 ◽  
Vol 28 (2) ◽  
pp. 83-87
Author(s):  
Vishnu Varshney
Keyword(s):  
Venture Capital ◽  
Capital Investment ◽  
New Technologies ◽  
Early Stage ◽  
New Ventures ◽  
Expert Advice ◽  
Venture Capitalist ◽  
Great Success ◽  
Venture Capital Investment ◽  
Promotional Effort

The concept of venture capital originated in the US in 1946. A number of new technologies which could be commercially exploited had come up after the Second World War and funds given for such ventures were called venture capital investment. Though the venture capital movement has been in existence for more than three decades in India, it has only recently gained momentum. New ventures found it difficult to get funding from the banks as they did not have any collateral to offer. Hence, venture capital industry was started in India to fund such enterprises. Gujarat Venture Finance Limited (GVFL) was set up by the World Bank in 1990. Till date, it has funded 56 companies from all over the country. GVFL supports only technology-oriented companies. Funding is provided in stages. The money given at the seed or early stage is called angel funding. This paper documents how GVFL funded and nurtured a venture called Permionics which was involved in manufacturing an innovative water filter and helped it to grow into a commercially viable enterprise. This was not smooth sailing and the venture did not take off initially as the project required a lot of product innovation and market research for its feasibility. However, the venture capitalist persisted with the efforts in making the venture successful as he had faith in the product. Thus, he went beyond hand-holding and helped in the company's promotional effort, getting expert advice, solving internal disputes, coordinating strategic tie-ups, etc. After some trial and error, the product was finally relaunched and was a great success. The main conclusions emerging from this paper are: A venture capitalist's contribution is not just funding an enterprise but also seeing to its proper functioning. A venture capitalist provides necessary linkages to the entrepreneur for the growth of the enterprise. A venture capitalist not only provides moral support but also helps in forming the company. He is more of a partner than an outsider. A good venture capitalist sees the enterprise through its ups and downs until it becomes a commercially successful venture.

Antecedents of Stage-wise Investment Preferences of Venture Capital and Private Equity Firms in India: An Empirical Exploration

2021 ◽  
pp. 097265272110229
Author(s):  
Poonam Dugar ◽  
Rakesh Basant
Keyword(s):  
Venture Capital ◽  
Empirical Analysis ◽  
Private Equity ◽  
Early Stage ◽  
Jel Classification ◽  
Specific Investment ◽  
Entrepreneurial Ecosystems ◽  
Firm Type ◽  
Investment Size ◽  
Investment Choices

This article is a maiden attempt at exploring determinants of stage-specific investment choices of Indian venture capital and private equity (VCPE) firms. Analysis of 5,782 VCPE investment deals during 1998–2016 shows that firms’ preferences to invest in various stages (early vs. late) are significantly affected by the characteristics of the VCPE firms, features of the deal, and characteristics of the investee firms. More specifically, experience and ownership (foreign vs. domestic) of VCPE firm, type of deal (syndicated or otherwise), investment size of the deal, and location and industry of the investee firm influence the stage of investment. Detailed empirical analysis shows that younger VCPE firms and those with domestic investors prefer to invest in early stages, presumably because they wish to build a reputation and also leverage their proximity with investee firms to manage high market and technological risks associated with early-stage investments. Syndication is another mechanism used to manage the risks associated with early-stage deals. Investee firms in industries that have lower investment requirements or shorter gestation periods and those located in regions with a mature entrepreneurial ecosystems are more likely to attract early-stage investments. JEL Classification: G24, L26, D81

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