Venture Capital

Financing
Valuation of Portfolio
-written up : third party, better operating results
- written down : long term problems , need finance

2. Unquoted development investments

- mature companies
- based on P/E ratio and dis rate

3. Quoted investments
- companies with IPO
- restriction on sale of shares
Valuation of Portfolio
2. Debt instruments

i. Convertible debt
❑ Market value method
- moving averages/weighted average is a better approach
- MV + fluctuations
- Underestimation
Valuation of Portfolio
❑ Fair value method
- Price in open market
- Biased

ii. Non convertible debt

❑ Fixed interest non convertible debt
- Relate nominal yield to current yield
- Maturity date, date of valuation ,safety etc
Valuation of Portfolio

❑ Non interest non convertible debt

- Discount rate acc to solvency

❑Highly leveraged investments

- At cost
Structural aspects
• Objectives

- Limited liability
- Simple operation
- Tax transparency
- Tax exemption for managers
- Tax benefits for investors