In this talk, we will conduct an introduction to the prospective and risk analysis methodology proposed by Mongrut and Juarez (2018) to assess a new startup. In the process, we will explain how to estimate different possible entrepreneurs' required returns that will change across years depending on the business risk within each scenario. We will also explain the implication of the typical overconfidence bias in the estimation of forward required returns and the importance of designing contingent strategies per scenario.
Presented by Samuel Mongrut, Ph.D.