Metrick Andrew, Yasuda Ayako. Venture Capital and the Finance of Innovation

Publisher: John Wiley & Sons, Inc.; 2 edition (November 2010, 2011), 592 p.
Language: English. Second edition.The financial principles every venture capitalist needs to masterin Venture Capital and the Finance of Innovation, Second Edition, future and current venture capitalists will find a useful guide to the principles of finance and the financial models that underlie venture capital decisions. Assuming no knowledge beyond concepts discovered in first-year Mba courses, the book will familiarize you with:The relationships between risk and return in venture capital.
Total Valuation-the data and methods used to value a high-growth company.
Partial Valuation-how to visualize and evaluate the special features of Vc transactions such as convertible preferred stock, participating preferred stock, payment-in-kind dividends, and liquidation preferences.New to the Second Edition:New co-author: Ayako Yasuda is Assistant Professor of Management at the Graduate School of Management, University of California, Davis and former faculty member in the finance department at the Wharton School of the University of Pennsylvania; prior to her Ph.D. she worked at the Investment Banking Division of Goldman, Sachs & Co.
New unified treatment of investment decision making combining total valuation and partial valuation analysis.
New rankings of the best venture capitalists.
New web-based model (Vcvtools.com) allowing easy visualisation and valuations of multiple term sheets in a start-up.
Refined version of reality-check valuation model to allow for greater flexibility in growth assumptions.
Updated risk-return and cost-of-capital calculations.
Updated industry data showing large changes in venture capital investments since 1999.
Streamlined exposition of real-options methodology, with new connections to venture capital valuation.
Discussion of challenges facing venture capital in the second decade of the 21st century.