Venture capital investments carry high risk and high return expectations and are usually made in rounds (seed, Series A, Series B). Because valuation rests on expectations of future growth, financial modelling and scenario analysis are important.
Related terms
Private equity fundAn investment fund that invests in the equity of unlisted companies with the aim of exiting after a certain period at a higher value.Financial modellingBuilding a model that forecasts the future financial performance of a company or project, with linked income statement, balance sheet and cash flow.Completion accountsFinancial statements prepared as at the closing date of an acquisition, through which the final price is set by net debt and working capital adjustments.Cost of capitalThe minimum rate of return investors expect from an investment in return for the risk they take.Discounted cash flow (DCF)A valuation method based on discounting the free cash flows an asset or company will generate in the future to the present using an appropriate discount rate.Earn-outA mechanism under which part of the purchase price is paid depending on the target company reaching certain performance targets after closing.
Last updated: October 22, 2026 · This definition is for general information only.