VC Valuation
The Game Theory & Real Options
Game theory is a fascinating and complex discipline that requires years of study to master. Here, I’ll cover the main directions and strategic insights, and finally, upload Excel […]
Archive
Category: Venture Capital & the Finance of Innovation – by A. Metrick & A. Yasuda
Derivatives
Binomial Trees
The appeal of valuing both financial and real options using binomial trees lies in their ability to evaluate more complex and nuanced situations. The Black-Scholes formula has many […]
VC Valuation
R&D Valuation
From the perspective of evaluating innovative projects, the model for releasing a new drug is very interesting. The process is fully regulated by the government, as neither the […]
Derivatives
Value of Option
Financial options are equivalent to “the right to choose,” and they have their specific, calculable value… Besides financial options, there are real options, whose identification, creation, and utilization […]
VC Valuation
Valuation of Real Options
The valuation of real options can be approached in the same way as financial options, though the main issue here is finding the correct discount rate. To remind […]
VC Valuation
Post Money Valuation (Implied)
The term Pre & Post-money valuation used by venture investors often communicates inadequate numbers. Besides causing legal and tax-related issues, it also creates unrealistic expectations for Limited Partners. […]
VC Valuation
RE Binary Call Options
Imagine offering startup employees an additional incentive: you’ll pay them another $5 million if they manage to increase the company’s value, which is currently $40 million, to $200 […]