Hello BVC Delegates,
As conference approaches and in light of some of the position papers that we have received so far, now serves as an opportune time to delve deeper into the more obtuse yet incredibly important details of entrepreneurship and venture capital, albeit it this time from the investors point of view, and the considerations and factors that they might value when comparing pitches and business proposals.
While our main goal is to facilitate the processes of innovation and enterprise in regards to sustainable development, the performance or potential of your business is of utmost importance; and while judging the effectiveness or inventiveness of new products and services is somewhat subjective, one can objectively compare a businesses' profitability by comparing key financial ratios and metrics on their balance sheet.
Obviously, as our committee is a simulation, there will not be explicit balance sheet numbers (We won't make you do all that math), but the principles behind the performance indicators are there, and may serve as useful guidance and insight in adjusting your plans.
We'll start with Return on Assets (ROA), which is the net income (The amount a company makes after the amount it took to make that money has been subtracted: Revenue - Expenses) divided by total assets. While you might not be able to explicitly know your total assets, one can extrapolate by factoring in the amount of capital one needs to conduct their operation (Is your offering a good? What kind of capital - factories, machines, etc. will you need to produce it?). Higher ROA is better than a lower ratio, as it means that one's company is profitable despite not having a lot of money in the first place, indicating great potential for future growth.
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