Financing Innovation: The Creation of Value
Even the best and most innovative ideas will go nowhere unless we can convince others to commit the necessary resources. Doing so almost always requires that we make a compelling case that the value of the opportunity far outweighs the upfront costs.
This course will cover the key techniques of financial valuation and capital budgeting used by major corporations. Understanding these techniques is critical for project sponsors to make sure their ideas get the attention ─ and funding ─ they deserve.
In this course, you will gain experience building an actual financial model to assess a proposed new product launch. We will consider key financial metrics that are often applied and learn which ones are reliable (and which are not). We will also look at how we can use the financial model to guide our attention as project managers in order to maximize the impact of our efforts. Along the way, we will gain insight into how financial markets work and how investors evaluate stocks. Finally, we will learn how to use these skills to understand the drivers of a company’s stock price, or its value in an acquisition.
- Interpreting balance sheets and income statements
- The difference between earnings and cash flows
- Measuring value using net present value, or NPV
- Return on investment and internal rate of return: uses and abuses
- Interest rates, risk, and the cost of capital
- Discounted cash flow and weighted-average cost of capital valuation models
- Building a financial model
- Valuing companies: Comparables vs. DCF
- VC financing
In this course, we will use a combination of lectures, quizzes, and individual and team assignments, together with a final team project, to prepare you to build a valuation model for a hypothetical business venture. At the conclusion of the course, you will have built your own financial model for assessing a project or investment, as well as for evaluating an ongoing business or a startup venture.