Flexibility and Venture Capital
There are several academic studies of how Venture Capitalists add value to their portfolio companies through stage financing, portfolio approach (investing in a portfolio of companies in the same or related industries), active investment style with significant control rights, including the right to replace the management team, etc.
I would like to hear your opinion about these and other mechanisms of Venture Capital investments as value-adding tools.
Discussion - JOBS Act and Private Equity
JOBS Act was signed into law in 2012, but only in 2015 SEC adopted Rules to Facilitate Smaller Companies' Access to Capital. Starting May 16, 2016, companies can use crowdfunding to offer and sell securities to the investing public (see the SEC Bulletin) and effect of crowdfunding on private equity investment is quite uncertain. Professional magazines discuss the future of VC and crowdfunding. Thus in 2013 CFO published an article "How Venture Capital and Crowdfunding Can Coexist". Entrepreneur magazine sometimes agrees (How Venture Capital and Crowdfunding Can Be Mutually Beneficial), but sometimes it sounds more skeptical "Will These 5 Models of Crowdfunding Replace Angel and VC Investors?"
In your opinion how JOBS act affect private equity investment in the near future?
Discussion - Discount Rate and Hedging
A friend of yours argues that WACC should be used as a discount rate in valuing a risky project using certainty-equivalent cash flows, when revenues are hedged using forward prices. Please comment.
Discussion - Real Options and Valuation of Intangibles
Many academics strongly advocate using real options in valuation of intangible assets. See, for example, Damodaran's article (you can also download it from here). Nevertheless, this method is not used in practice very often. In your opinion, what are the reasons for not seeing real option valuations of intangibles more often?
Discussion - Behavioral Bias in Real Options
There is some anecdotal evidence that option to abandon does not have as much value as theory predicts, because managers tend to get attached to a project and abandon it later than they should. Can you think of other examples, when behavioral bias affects the value of real options? How would you suggest to adjust the theoretically predicted value?