A venture capital proforma is a financial projection model that is used to estimate the potential returns on a venture capital investment. The proforma typically includes projected financials for the portfolio company, such as revenue, expenses, and cash flow, as well as assumptions about the company’s growth rate, market size, and competition.
The proforma is used to help venture capitalists evaluate the potential returns on an investment and to compare the potential returns of different investment opportunities. The proforma is also used to help the venture capitalist to understand the potential risks and rewards of an investment and to create a plan for exiting the investment.
The proforma will typically include the following components:
Working capital projections
Exit multiple and implied valuation
IRR (Internal Rate of Return) and Payback period
It’s important to note that a venture capital proforma is a forward-looking financial projection, it’s not a guarantee of future performance, and actual results may vary.
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