Finance for Startups

Introduction
Steve Ahn
Professor of K-School
KAIST
 Why Finance?
• Startup: Input $, output $$$ $$$
• How to find $.
• How to use $ in the best way.
• How to monitor the startup’s progress.
• How to predict the future ($$$). $

You need to understand finance.

 Funding
Founder(s) should make sure that the startup is
adequately funded.
Financial planning

Funding

Valuation
 Financial Statements
Study of finance should start with understanding
financial statements.
Gives perspectives on the health of a business:

Balance sheet Assets, liabilities & equity

Income statement Profitability

Cash flow statement Cash movements

 Course Schedule
Week

1 Introduction Balance sheet Income statement

2 Cash flow statement Financial ratios

3 Financial planning Funding

4 VC term sheet Valuation

What is a Balance Sheet?
 Accounting Equation

What a
Liabilities company owes
What a Assets
company has Owners’
Company’s net
equity worth

Assets – Liabilities = Owners’ equity

Assets = Liabilities + Owners’ equity
 Why a Balance Sheet Balances
Liabilities &
Assets Owners’ equity

Cash Equity Receive investment

Cash Loan Borrow money
Less cash Buy equipment
Equipment
More cash or Retained
Generate profit
Account earning
receivable
 Meaning of the Balance Sheet

Right side:
How the company is funded Asset Liability
Left side:
How the company uses the money
and Owner’s
what resources the company has Equity
 Summary
• Assets = Liabilities + Owners’ equity

• Balance sheet
Right: How the company is funded
Left: How the company uses the money