Financial Risk Management

Strategies for risk management often involve derivatives. Derivatives are traded widely among financial institutions and on organized exchanges.The value of derivatives contracts, such as futures, forwards, options, and swaps, is derived from the price of the underlying asset. Derivatives trade on interest rates, exchange rates, commodities, equity and fixed income securities, credit, and even weather.

This week we have Kelly Hwang, Associate at GRP. For more information, show notes, and an upcoming schedule, go to www.thisweekin.com. Mark Suster hosts This Week in Venture Capital. The following is from Mark Suster’s post on www.bothsidesofthetable.com How VC’s Calculate Valuation: We walked through a standard deal where you raise $1 million at a $3 million pre-money valuation leading to a $4 million post money valuation. The math works out that the investor owns 25% of the company post deal ($1 million invested / $4 million valuation) and assuming 1 million shares, each share would be valued at $3 / share ($3000000 pre-money / 1 million shares = $3 / share). Investors own 25%, the founders own 75%. NOTE: In the video I talked about how VC’s and entrepreneurs decide the total number of shares at the first major funding round and why it’s often a high number. But this example above is all entrepreneur math, not the VC’s. The VC assumes you’ll have an option pool. That’s normal. You’ll need to hire and retain talen to grow your company. Those options need to come from somewhere. The more senior members you have (say you already have a CEO, CTO, VP marketing, VP Biz Dev, VP Products) then the less options you’ll need and vice versa. Industry standard post your first round of funding will be 15-20%. I say “post” funding because you’ll need more than this amount pre-funding to get to this number after funding. We walk through this in the video. To view the more detailed …