Valuation: The “Venture Capital” (VC) method

An introduction to valuation using the “Venture Capital” method. Originally recorded by Prof. Luke Stein for a Babson College MBA core finance course. Introducing the “VC method” which combines discounted-cash flow (DCF) with a terminal value from a relative valuation (multiples) or precedent transactions. A simple example of calculating terminal value, pre-money value, post-money value, price per share, and dilution. See also https://www.vcmethod.com 0:00 - Introduction 2:49 - Conceptual overview 6:04 - Example setup 8:52 - Worked example (pencil and paper) 12:20 - Worked example (spreadsheet) 14:07 - Valuation wrap-up