Entrepreneurial Finance: Seed Funding and Valuation Methods

This lecture by the instructor covers the fundamentals of entrepreneurial finance, focusing on seed funding instruments such as common equity, convertible preferred, and convertible notes. It delves into the details of convertible notes, including rules of conversion, discounts, and examples. The lecture also explores the concept of cap tables, explaining how convertible notes impact ownership stakes. Additionally, it discusses the Simple Agreement for Future Equity (SAFE) and the 'option pool shuffle' in seed funding negotiations. The instructor provides insights into the VC method of valuation, emphasizing the importance of estimating successful exit valuations and target multiples of money. Various examples and scenarios are presented to illustrate the application of these concepts in real-world investment decisions.