Business Capitalization (Funding Process) – Explained

by TheBusinessProfessor | Feb 23, 2025 | Strategy, Entrepreneurship, & Innovation

What is Business Capitalization?Capitalization is the funding of the business venture. A startup will be capitalized by contributions from founders. In exchange for contributed value (funds or assets) the founders will receive shares of the...

Initial Board Actions – Explained

by TheBusinessProfessor | Feb 23, 2025 | Strategy, Entrepreneurship, & Innovation

What are Initial Board Actions?The initial board is charged with establishing the operations of the corporation. This begins with resolutions approving and authorizing certain corporate actions. Approving or setting these actions in motion are the core...

How to Fund a Business – Less Common Methods

by TheBusinessProfessor | Feb 23, 2025 | Strategy, Entrepreneurship, & Innovation

What are some less-common Methods of Financing Business Operations?Specific types of business operations may allow for unique ways to finance operations outside of the traditional debt or equity relationships. Several of these approaches are discussed...

Strategic Considerations in Valuation – Explained

by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles

Strategic Considerations in ValuationSubjective factors are routinely used to either discount or justify a premium valuation. For example, a specific company may derive a valuation for a firm based upon strategic considerations that are unique to that...

First Chicago Valuation Method – Explained

by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles

What is the First Chicago Method of Business ValuationThe First Chicago Method is a hybrid approach that employs multiples to derive a terminal value and discounts future cash flows to arrive at a present valuation. Notable about this method is that it requires three...

Venture Capital Method – Business Valuation

by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles

What is the Venture Capital Method of Business Valuation?The venture capital method (VC Method), as the name implies, is most commonly used in the venture capital industry and for valuing startup ventures. As discussed in separate lectures, investors seek to...

Angel Investor – Valuation Methods

by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles

What is an Angel Investor Valuation Method?Investors have developed multiple valuation strategies to account for the difficulty in assessing the value of early-stage, growth-based startups in the technology space. Two well-known methods are the Berkus Method and the...

Pre-Money and Post-Money Calculations – Explained

by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles

 What is Pre-Money and Post-Money Valuation? The value of a business in a funding transaction begins with determining the pre-money and post money valuation. This valuation will be used to determine how many shares are issued to the investor and what percentage of...

Value of Dividends Method – Explained

by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles

What is the Value of Dividends Method of Valuation? This method relies on the idea that a stock is only worth what it will provide to investors in future dividends. If a business does not currently distribute dividends, the value of the stock will appreciate under...

Economic Value Added – Explained

by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles

What is the Economic Value Added?Economic Value added is method of measuring the return on investment expected from the company above the relative cost of capital. How to Calculate the Economic Value Added?The equations is: Economic value added = Net operating profit...