Saturday, February 2, 2008

CFA L1 Alt. Inv. Venture Capital Investing

g. explain the stages in venture capital investing, venture capital investment
characteristics, and challenges to venture capital valuation and performance
measurement;

Stages of Venture Capital Investing

Seed-stage

Early-stage

Formative-stage

Later-stage

Expansion-stage


Venture capital investment characteristic

Illiquidity
Long-term commitment
Difficulty in determining current market values
Limited historical risk and return data
Limited information
Entrepreneurial management mismatches
Fundmanager incentive mismatches
Lack of knowledge of competitors
Vintage cycles
Extensive operations analysis and advice

types of liquidation

Exits

divestment by trade sale
divestment by IPO/Floatation
Sale of quoted equity
Divestment by writeoff

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