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POSTS RELATED TO FINANCIAL MODELS

Fair Value Accounting Improves the Quality of Portfolio Company Valuations A guest post by Prof. Nicholas G. Crain | CIV 2014 Grant Winner

In a recent study, partially funded by a CIV Research Grant (2014), Kelvin Law and Nicholas G. Crain delve into the impact of fair value accounting on the valuation of individual private equity investments. The evidence gathered suggests that accounting standards matter for the valuation of private equity investments. Prior to implementation of fair value accounting, the discounted value of cash flows from realized portfolio companies exceeded their valuation by roughly 26%, yet the implementation of fair value accounting appears to eliminate nearly half of this bias, and resulted in a significant improvement in the quality of portfolio company valuations. Read more in a guest post by Nicholas G. Crain.

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Structured Exits: A Potential New Source of Funding for Life Science Startups A Guest Post by Leslie Mitts

Structured exits are an important funding structure for new ventures. Rather than relying solely on the upside from an exit, structured exits can rely on the venture’s anticipated cash flow, or percentage of milestone payments, to repay the investor. For investors, they can offer reduced risk with the possibility of an upside; for ventures, they provide a new source of growth capital and less dilution. For life-sciences companies caught in the “death valley” between seed grants and venture capital eligibility, structured exits - carefully adapted and applied - can be a new alternative or complement to bridge loans, incubators, strategic investors, and non-dilutive funding from government sources. Read more in a guest post by Leslie Mitts, featuring Att. David Gitlin, on the CIV website.

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The Trade-Off Between Ownership and Investment: Evidence from Equity-Crowdfunding Campaigns Summary of Research Partially Funded by a CIV Grant

Every entrepreneur raising equity from investors faces a fundamental trade-off between retaining greater ownership in the company versus raising more funds. Equity crowdfunding is a recent FinTech innovation, allowing entrepreneurs to raise funding from "crowd" investors who can individually invest in a campaign, in return for equity shares. In a guest post by Nir Vulkan (Oxford Business School), the researchers set out to try and understand what factors explain the decision of entrepreneurs to take overfunding.

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First Call for Research Ideas on Venture Financing

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第一通知关于创业融资研究思路 We are interested in your input for where we should take this strand:

  • Which research directions are interesting? What is new and trending in this space?
  • What funding models should we include?
  • Who are the key experts we should approach?
  • Do you have a paper to propose to our issue?
  • Do you wish to stay informed and interact with us as things come together?

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