{"product_id":"venture-capital-valuation-website-isbn-9780470908280","title":"Venture Capital Valuation, + Website","description":"\u003cp\u003eVery few of the decision makers involved in a venture backed company have a definitive understanding of how valuation techniques are being applied to their financial statements and their decision making process. This casebook provides a quick and accurate road map on how valuation techniques used for tax, financial reporting and deal structure impact a company's past, present and future. The book includes real world case studies to simplify this complex subject for the practitioners serving companies, the founders and executives running the companies, and the investors that fund the companies.\u003c\/p\u003e \u003cp\u003eAcknowledgments ix\u003c\/p\u003e \u003cp\u003eIntroduction\u003c\/p\u003e \u003cp\u003eWhat You Don’t Know About Valuation Will Cost You Money 1\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 \u003c\/b\u003e\u003cb\u003eUsing Facebook, Twitter, and LinkedIn to Explain VC Valuation Gains and Losses: How VCs, Angels, Founders, and Employees Give Up Investment Cash Flow Every Day 13\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eDid Valuation Ignorance Cost ConnectU (and the Winklevosses) $50MM? 14\u003c\/p\u003e \u003cp\u003eAn Expert Doesn’t Need a 409A Valuation When He or She Has a Certificate and Basic Math 15\u003c\/p\u003e \u003cp\u003eValuing Facebook’s Common Stock Compared to Preferred Stock in Minutes 16\u003c\/p\u003e \u003cp\u003eWhat the Winklevosses Would Have Seen in Any 409A Valuation Report 19\u003c\/p\u003e \u003cp\u003eDeriving a Discount for Lack of Marketability for Valuations 27\u003c\/p\u003e \u003cp\u003eFacebook at $80 Billion Valuation versus Enron at $80 Billion Valuation 35\u003c\/p\u003e \u003cp\u003eDeal Terms, Waterfalls, and the Pre-Money Myth 36\u003c\/p\u003e \u003cp\u003eThe Pre-Money Myth 44\u003c\/p\u003e \u003cp\u003eSummary 56\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 \u003c\/b\u003e\u003cb\u003eShould Venture-Backed Companies Even Consider a DCF Model?: Introducing the Life Science Valuation Case: Zogenix 57\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eZogenix: Company Background Summary and Highlights 58\u003c\/p\u003e \u003cp\u003eLeaping Forward Just 20 Months, the Company Files for an IPO 64\u003c\/p\u003e \u003cp\u003eOrder of Valuations Presented in This Case 67\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 \u003c\/b\u003e\u003cb\u003eValuation Methods versus Allocation Methods Regarding Zogenix 69\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eSeparating Enterprise Value from the Allocation of That Value 69\u003c\/p\u003e \u003cp\u003eValuing Total Equity 72\u003c\/p\u003e \u003cp\u003eUsing Future Value (FV) and Present Value (PV) to Value Future Cash Flows Today 79\u003c\/p\u003e \u003cp\u003eSummary 82\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 Applying the Typical DCF Model to a Venture-Backed Company Hardly Ever Works 85\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Gordon Growth Model 85\u003c\/p\u003e \u003cp\u003eHigh Growth Limits the Gordon Growth Model 87\u003c\/p\u003e \u003cp\u003eDividend Irrelevance and Capital Structure Irrelevance 90\u003c\/p\u003e \u003cp\u003eUsing Comparables (Generally Market Multiples) to Generate a Terminal Value 91\u003c\/p\u003e \u003cp\u003eActual Differences between Angels and VCs versus Perceived Differences 100\u003c\/p\u003e \u003cp\u003eApplying Valuation Methods and Allocation Methods at Inception 102\u003c\/p\u003e \u003cp\u003eSummary 104\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 \u003c\/b\u003e\u003cb\u003e“Enterprise Value” + “Allocation Methods” = Value Destruction: Undervaluing Companies and Overvaluing Employee Options 107\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eMost 409A Valuations Undervalue the Company and Simultaneously Overvalue Employee Stock Options 107\u003c\/p\u003e \u003cp\u003eDid Auditors Drive Valuators to Overvalue Employee Stock Options? 109\u003c\/p\u003e \u003cp\u003eMost 409A Enterprise Value Calculations Ignore the “Takeover” Value of Preferred 113\u003c\/p\u003e \u003cp\u003eThe Realistic Range of Possibilities Depends on Who the Investors Are 119\u003c\/p\u003e \u003cp\u003eOverstating Returns and Understating Returns on the Same Asset (Simultaneously) 125\u003c\/p\u003e \u003cp\u003eWhat Happens to Fund IRRs When You Assume Book Value Equals Market Value? 128\u003c\/p\u003e \u003cp\u003eThe Real Cost of Fair Value, Fair Market Value, and Enterprise Value 132\u003c\/p\u003e \u003cp\u003eYahoo! Case 137\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 \u003c\/b\u003e\u003cb\u003eWhy You Should D.O.W.T. (Doubt) Venture Capital Returns—Option Pool Reserve 159\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eUnissued Option Pools 159\u003c\/p\u003e \u003cp\u003eValue Conclusion Elements Impacted by Option Pool Reserve Assumptions 161\u003c\/p\u003e \u003cp\u003eImpact on Parties Relying on Assumptions of VC Investments 176\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 \u003c\/b\u003e\u003cb\u003eIf Valuation Can’t Make You Money, Do You Really Need It?: Learning Practical Applications from Kayak.com 183\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eApplying Studies to Real-World Cases 186\u003c\/p\u003e \u003cp\u003eImportant Questions to Ask 213\u003c\/p\u003e \u003cp\u003eSummary 223\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 \u003c\/b\u003e\u003cb\u003eDon’t Hate the Appraiser (Blame the Auditor Instead) 225\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eInterview with Jeff Faust, AVA 226\u003c\/p\u003e \u003cp\u003eSummary 236\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 \u003c\/b\u003e\u003cb\u003eDon’t Blame the Auditors (Blame the Practice Aid Instead): 409A Valuation Professionals Discussing Topic 820 (FAS 157) with VC CFOs 237\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction to the Expert Panelists 238\u003c\/p\u003e \u003cp\u003eThe Auditor’s Valuation “Bible” 239\u003c\/p\u003e \u003cp\u003eSAS101 Tests, PWERMS, and OPMs 240\u003c\/p\u003e \u003cp\u003ePWERMS and rNPV\/eNPV Models 243\u003c\/p\u003e \u003cp\u003eSubjectivity and the PWERM (or “Power”) Method 243\u003c\/p\u003e \u003cp\u003eFinding Inputs for the OPM Model 245\u003c\/p\u003e \u003cp\u003eEnterprise Values versus Allocations 246\u003c\/p\u003e \u003cp\u003eNext Round Pricing and Topic 820 248\u003c\/p\u003e \u003cp\u003eDifferent Ways of Treating Granted, Unvested, and Reserved Options 250\u003c\/p\u003e \u003cp\u003eValuing Warrants in Venture-Backed Companies 252\u003c\/p\u003e \u003cp\u003eQuantifying Qualitative Inputs to Value Conclusions for VC-Funded Companies 253\u003c\/p\u003e \u003cp\u003eDiscounts for Lack of Marketability (DLOM) and Venture-Fund Portfolios 254\u003c\/p\u003e \u003cp\u003eSharespost, SecondMarket as Market Inputs 258\u003c\/p\u003e \u003cp\u003eSummary 262\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 \u003c\/b\u003e\u003cb\u003eNow That You Understand Venture Capital Valuation, Share It 263\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eAbout the Author 269\u003c\/p\u003e \u003cp\u003eIndex 271\u003c\/p\u003e \t \u003cp\u003e\u003cb\u003eLORENZO CARVER, MS, MBA, CVA, CPA,\u003c\/b\u003e is CEO of Liquid Scenarios, a technology-based financial business intelligence solution company that provides services to investors, practitioners, entrepreneurs, and academics on how to measure and realize high-growth venture value. Carver has a twenty-year track record of helping thousands of clients understand how to measure and realize high-growth venture value. He is the author and developer of \u003ci\u003eBallPark Business Valuation\u003c\/i\u003e, the #1 selling, award-winning small-business valuation solution software covered by \u003ci\u003eBloomberg Businessweek\u003c\/i\u003e, \u003ci\u003eEntrepreneur, CPA Software News, The Kim Komando Show,\u003c\/i\u003e and business journals worldwide.   \u003c\/p\u003e\u003cp\u003eImagine selling $2 million \"worth\" of Google stock and only receiving $50 in return? This scenario happens every day for venture-backed companies. Failure to quickly understand high-growth company valuation can cost trillions of dollars. Yet very few leaders involved in a venture-backed company have a definitive understanding of how valuation techniques are being applied to their financial statements and the decision-making process. Featuring extensive case studies of high-profile corporations, including Facebook, Twitter, and Microsoft, \u003ci\u003eVenture Capital Valuation\u003c\/i\u003e provides the knowledge and techniques necessary to understand and value high-growth companies. \u003c\/p\u003e\u003cp\u003eSharing his twenty-year track record helping thousands of investors, practitioners, and entrepreneurs measure and realize high-growth venture, author Lorenzo Carver draws on real-world cases from investors, founders, and advisors to illustrate how each corporation was impacted by valuations. By putting these techniques into a context and framework, \u003ci\u003eVenture Capital Valuation\u003c\/i\u003e simplifies them so that anyone founding, running, and investing in these innovative companies can apply them immediately. \t\u003c\/p\u003e\u003cp\u003eFeaturing a companion website where readers can access and download additional case study material, as well as different valuation materials mentioned throughout the text, \u003ci\u003eVenture Capital Valuation\u003c\/i\u003e explores: \t\u003c\/p\u003e\u003cul\u003e  \u003cli\u003e Why what you don't know about valuation will cost you money\u003c\/li\u003e \u003cli\u003e How VCs, angels, founders, and employees give up investment cash flow every day\u003c\/li\u003e \u003cli\u003eFacebook at $80 billion valuation versus Enron at $80 billion valuation\u003c\/li\u003e \u003cli\u003eDeal terms, waterfalls, and the pre-money myth\u003c\/li\u003e \u003cli\u003e Whether venture-backed companies should even consider a discounted cash flow (DCF) model\u003c\/li\u003e \u003cli\u003e Separating enterprise value from the allocation of that value\u003c\/li\u003e \u003cli\u003eValuing total equity Using Future Value (FV) and Present Value (PV) to value future cash flows today\u003c\/li\u003e \u003cli\u003eWhy applying the typical DCF model to a venture-backed company hardly ever works\u003c\/li\u003e \u003cli\u003e \"Enterprise Value\" + \"Allocation Methods\" = Value Destruction\u003c\/li\u003e \u003cli\u003eUndervaluing companies and overvaluing employee options\u003c\/li\u003e \u003cli\u003eWhy you should D.O.W.T. (doubt) venture capital returns\u003c\/li\u003e \u003cli\u003e 409A valuation professionals discussing topic 820 (FAS 157) with VC CFOs\u003c\/li\u003e \t\t\u003c\/ul\u003e \u003cp\u003eAn invaluable resource for anyone who wants to make the most out of their investments, \u003ci\u003eVenture Capital Valuation\u003c\/i\u003e shows business appraisers and venture capitalists how to maximize their returns and avoid losing money—before the damage becomes irreparable.\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47990449012965,"sku":"NP9780470908280","price":115.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9780470908280.jpg?v=1761787874","url":"https:\/\/k12savings.com\/es\/products\/venture-capital-valuation-website-isbn-9780470908280","provider":"K12savings","version":"1.0","type":"link"}