How does Venture Capital analyse an investment?

How does Venture Capital analyse an investment?

When valuing early-stage businesses, analysts cannot rely on things like discounted cash flow figures as companies at seed stage usually have not yet made revenue. Alexandra discusses the three pillars that venture capitalists look at when evaluating investment opportunities: Product, Market, and the Team.
Overview

Venture capital or ‘VC’ is a type of private equity financing provided by firms or funds to early-stage emerging ventures deemed to have high-growth potential. VC evaluations of investment opportunities most commonly revolve around a three-pillar analysis: product, market, and founders/team. VC investments are deemed to be high-yield and have high rates of failure.

Key learning objectives:

  • What do venture capitalists look for in investments? What are Porter’s Five Forces?

  • What are the key criteria VCs use for selecting investments?

  • What do VCs look for in founders?

  • How do VCs measure market size? What are TAM, SAM and SOM?

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Expert
Alexandra Perez

Alexandra Perez

Alexandra is currently completing her MBA at the University of Oxford, where she is the Director of the Oxford Seed Fund. Prior to her MBA, Alexandra built and led the marketing function for a boutique consultancy in London where she later became a management consultant for blue-chip corporates. Most recently she has been consulting for various PropTech companies.

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