Value Creation and Corporate Finance for Tech Entrepreneurs

A few years ago when I started my startup, I just completed an MBA in Finance and all three levels of the CFA program.

I was abundantly confident about my understanding of business and finance. In retrospect, my view on startups was completely wrong.

A startup is not a smaller version of a large company – it is not a small business.

Startups, especially tech startups are very different animals and often entrepreneurs learn this truth through rude awakenings.

Before acting as a manager, a founder needs to be an entrepreneur and entrepreneurs create value. Before managing the business, you have to build the business.

Traditional financial education is too dependent on the Going Concern assumption – i.e. the business will continue to operate indefinitely, with no intention or necessity of liquidation or cessation of operations in the foreseeable future.

This assumption is simply NOT applicable in the case of startups.

So, tech entrepreneurs need to approach finance from a value creation point of view. This will allow them to incorporate the uncertainty associated with startups in financial decision-making.

So, the focus of this course is to introduce various financial tools specially designed for startups along with building a strong base in corporate finance.

This is a fairly long course – 5.5 hours long. So, please allocate enough time. Some parts of the course can be complex. So, please go slow and contact me if needed.

Now, the course is divided into the following parts along with an introductory chapter.

– Value Thinking – Introduces the concepts you need to understand value such as value creation, Lifetime Value, forms of value, and USPs. and Economic Goodwill.

– Financial Accounting Basics – builds a strong foundation in financial accounting with concepts such as cash and accrual accounting, financial statements, etc.

– Capital Investments and Fundraising – Covers two related topics i.e. Capital Investments and Fundraising. In the Capital Investments section, we will cover a framework for management capex, cost of capital, capital structure, and capital investment assessment – traditional and non-traditional, etc. In the fundraising section, we will cover various sources of funds, financing instruments, funding rounds, financing terms used in startup financing, capitalization (cap) table along with some sample cap table calculations.

– Valuation of Young Companies – Covers valuation approaches and various methods are used to value young companies.

– Cost Accounting – Covers basics of cost accounting and Break-even Analysis.

– Financial Ratios – Profitability ratios, Return ratios, Leverage ratios, Efficiency ratios, etc

Caution: This course covers a lot of calculations. If you are not comfortable with numbers, this course is probably not suitable for you.