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You are a venture capitalist who is interested in funding new firms focusing on software as a service (SaaS). You plan on investing in stages
You are a venture capitalist who is interested in funding new firms focusing on software as a service (SaaS). You plan on investing in stages according to the schedule in the table below Probability of failure 90% 25% 5% Stage Investment $1M $10M $200M You only increase your investment if the company succeeds in the prior stage. For example, if the company fails in stage 2, you do not make the stage 3 investment. If the company succeeds after the final stage, the revenue is expected to be SR. How high would SR have to be for this sequence of investment decisions to be a smart plan? Use a decision tree to illustrate
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