Valuation and Financial Analysis For Startups Capstone

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Overview

This is a peer review course. In the capstone project, you are going to apply what you have learned in the previous courses. The final output from this project is an estimation of a firm. You can choose either a public company or a startup depending on the availability of information on the firm. If you have your own startup, then you can do this capstone project on the startup. If not, then you can do this project of a public company. Therefore, the first step is selecting an actual company that you are interested in. Next, you have to do the research on and describe the firm’s industry and business. Based on your research, you make an estimate of firm’s growth, cash flows and earnings. In order to do this, you need to apply what you have learned in financial statement analysis. Once you find firm’s cash flows and earnings, you can apply what you have learned in discounted cash flow method and multiple methods to find the value of the company. In addition to the valuation, you will be given a hypothetical project and have to decide whether to take the project if the opportunity is given to the company of your choice. Be doing this Capstone project, you will complete your understanding of valuation and financial analysis of startups.

Syllabus

Introduction to Capstone Project
-For Capstone Project, you are allowed to select a startup of your own choice. Then describe the company in detail such as business industry, competitors (or company) and service or product.

Capstone Project I
-For Capstone Project I, you will investigate historical performance of the startup that you select. You need to collect financial statements at least 3 years and need to make up numbers for the startup with reasonable assumptions.

Capstone Project II
-For Capstone Project II, you will calculate free cash flow of the startup. In order to estimate free cash flows, you need to make pro forma statements of the startup and estimate external financing needed. Also, calculate internal growth rate and sustainable growth rate.

Capstone Project III
-For Capstone Project III, you will find value of the startup using Multiple approach and Discount Cash Flow approach. In specific, you will apply multiple and DCF approach to find terminal value of the startup. After finding the value of a startup, consider the situation where startup finances external financing needed using new investment from venture capitalists.

Capstone Project IV
-For Capstone Project IV, you will think of an investment opportunity that your startup is likely to face in the near future and determine whether you would accept the investment using capital budgeting techniques. After estimating yearly cash flows of the project, apply three major capital budgeting techniques, NPV, IRR, and payback period, to determine whether you should accept the project.

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