Assessing the Economic Value of Venture Capital Contracts

1. Front Matter

   Pages i-xv

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2. Introduction

   • Jil Caroline Onimus

   Pages 1-25

3. General Methodology

   • Jil Caroline Onimus

   Pages 27-57

4. Venture Capital Contract Pricing Model

   • Jil Caroline Onimus

   Pages 59-120

5. Application of the Pricing Model

   • Jil Caroline Onimus

   Pages 121-137

6. Conclusion

   • Jil Caroline Onimus

   Pages 139-142

7. Back Matter

   Pages 143-153

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Jil C. Onimus makes a contribution to the nascent research line on the economic value of venture capital contracts which lies at the intersection of venture capital contract design and real option pricing. She identifies the baskets of real options embedded in model venture capital contracts as published by the National Venture Capital Association (NVCA) and shows how they can be priced in interaction using Least Squares Monte Carlo simulation. The pricing model is calibrated by means of a dataset of deal terms in Silicon Valley as well as industry statistics from the NVCA. By applying the model to standard investment scenarios (multiple financing rounds with multiple investors), the author obtains estimates of option values for individual terms and for full contracts with interaction effects.

• Effective Company Valuation
• Least Squares Monte Carlo Simulation
• Private Equity
• Real Option Baskets
• Shareholder Agreements

Dr. Jil Caroline Onimus earned her doctoral degree from the European Business School, Endowed Chair for Corporate Finance and Capital Markets. She works as an advisor to consumer internet companies on strategy, fundraising and corporate development.

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