entrepreneurship

1. New Venture
Financials and
Business
ValuationOne Asset Management

2. New Venture Financials and
Business Valuation
To share knowledge and experience
of the venture capital industry in term o
f new venture capital financials and busi
ness valuation by venture capitalists’ po
int of view in order to give fundamental
knowledge for further study or practical
use in the real business operation.
Objective

3. Research
Grant
Business
Expansion
Market
Expansion
Product
Launch
Product
Development
Idea
Conception
Angel
Venture Cap
Venture
Capital
IPO
Business Cycle and
Financing Need
Debt
Financing

4. Sources of Funds for
Enterprises
Debt Financing
1. Short-Term Loan : Working Capita
- O/D , P/N , Cheque Discount
- Packing Credit
- Factoring
2. Long-Term Loan : Fix Asset
- Loan (Repayment term of 3-10
years)
- Lease Financing (3-5 years)
New Venture Financials and
Business Valuation

5. Sources of Funds for
Enterprises
3. Debenture : Working Capital / Fix
Asset
- Secured Debenture
- Unsecured Debenture
- Convertible Debenture
Equity Financing
1. Preferred Stock
2. Common Stock
New Venture Financials and
Business Valuation

6. Institutions Supplying for
financing
Debt Financing
1. Government’s Special Purpose Bank
1.1 The Government Saving Bank
1.2 Small and Medium Enterprises
Development
Bank of Thailand (SMEs Bank
1.3 Bank for Agriculture and
Agricultural Cooperatives
2. Commercial Bank
New Venture Financials and
Business Valuation

7. Institutions Supplying for
financing
3. Other Financial Institutions
3.1 Finance Company
3.2 Leasing Company
3.3 Factoring Company
New Venture Financials and
Business Valuation

8. Institutions Supplying for
financing
Equity Financing
1. Government’s Venture Capital Fund
1.1 SMEs Venture Capital Fund :
ONE ASSET MANAGEMENT LIMITED
1.2 The Office of Small and
Medium Enterprises
Promotion
1.3 National Innovation Agency
2. Venture Capital Company
2.1 Venture Capital Management
New Venture Financials and
Business Valuation

9. Financial Aspect of Business
Plan
Financial Plan should provide the
following information for investors/
lenders:
Sources of Funds
Uses of Funds
Projected financial position of the firm
(Income Statement, Balance Sheet,
Cash flow statement)
The Plan should also include how the
funds/loans can be repaid
New Venture Financials and
Business Valuation

10. Venture Capital as a New
Source of Fund
Venture Capital is one of the equity
financing sources of funds in order to
invest in good potential businesses.
Venture Capital will invest in enterprises
in term of preferred stock or common
stock as a partner of the enterprises and
hold the investment for a specific period
of time.
New Venture Financials and
Business Valuation

11. What VC are looking for?
Historical financial data
Good and undated financial statements
Management team Profile
Income Statement:
Revenue recognition (whether there
are conditions on sales)
R & D
Costing : accural rather than cash
Often forgotten costs : financing
cost
New Venture Financials and
Business Valuation

12. What VC are looking
for? (Cont’d)Cash Flow
Collection Period
Monthly Cash Flow for the
first year
Yearly Cash Flow thereafter
New Venture Financials and
Business Valuation

13. How Does Venture Capital
Determine Business Value ?
Qualitative Business Valuation
•Analysis of Management
• Reviewing Personnel and
Compensation
• Analysis of Marketing and Sales
- Market Segment
- Market Trend
- Market Share
• Investigating Product
New Venture Financials and
Business Valuation

14. How Does Venture Capital
Determine Business Value ?
SWOT ANALYSIS
S trengths
W eaknesses
O pportunities
T hreats
w Venture Financials and Business V

15. Quantitative Business
Valuation
• Analysis of The Financial
Statements and Projections
- Profit and Loss Statement
- Balance Sheet Statement
- Cash Flow Statement
- Source and Use of Fund
- Ratio Analysis
New Venture Financials and
Business ValuationDoes Venture Capital Determine Busine

16. Methods of Quantitative
Business Valuation
- Book Value
- P/E Ratio
- Discount Cash Flow
- Price to Book Value
New Venture Financials and
Business ValuationDoes Venture Capital Determine Busine

17. Financing Issues for Software
Business
High investment in human capital in
initial stage
Debt financing difficult due to lack
of collateral
Difficulty in valuation of IP for
venture capital financing
Understanding of the business by
venture capitalist
w Venture Financials and Business Va

18. Preparation for Getting
FinancingCommon problems faced:
Efficiency in operation
Business knowledge
Weak financial background
Financial Statement not
addressed properly
Underestimation of support
costs
Lack of legal expertise,
especially contract laws
w Venture Financials and Business V

19. Preparation for
Getting FinancingNo risk assessment (unfinished
contract, cost overrun, copyright
protection, etc.)
Overestimation of revenues
Accounting issues, especially cost
allocation
Human resource issues not
addressed properly
Overseas opportunity to go
beyond domestic valuation
w Venture Financials and Business V