How Do Venture Capitalists Value Your Business?

A key consideration for a company seeking venture capital financing is the valuation of the

business by the venture capitalist. The higher the valuation, the less "dilution" current shareholders will suffer with the issuance of stock to the venture capitalist.

As the saying goes, valuation is an art, not a science. Venture capitalists basically analyze the existing financial condition of the company, the developmental stage of its products or services, and the company’s prospects. They also consider the valuations of other comparable companies.

Full Story: http://www.allbusiness.com/articles/StartingBusiness/921-32-1858.html