This higher risk level in health/pharma companies shows up in the way VCs structure their investments. In an early-stage round of financing for a software company, all the investors may dilute the founders by around 15 to 30 percent of the company’s stock. For a typical early-stage pharma or biotech company, investors may dilute the founders at a h

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Graduation Rate Assumptions: Individual company dilution needs to be factored into fund performance. One way to do this is to make some assumptions around the percentage of total companies raising subsequent financing rounds, as well as assumptions on the size and pre-money valuations of those rounds. Some funds may assume that of all the seed inv

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Valuations are a big mystery to many entrepreneurs. And for good reason. In the early stages, valuation is not a factor of revenue or much else. According to research done by Ilya Strebulaev, a professor of venture capital at Stanford Graduate School of Business, and his collaborators, most VCs, especially early-stage VCs, don’t use techniques such

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There’s a broad spectrum of VCs and founders, the latter of whom possess differing levels of capability to maintain high growth and continually raise equity dollars at inflated valuations. For example, there are many companies who raise an angel/seed round, then a Series A, spend most of it on customer acquisition which flows right into FB and Goog... See more