Startup Valuation Voodoo

Venture capitalists have their checkbooks out, which should make entrepreneurs smile.

A recent study from Cooley Godward notes that, in the fourth quarter of 2005, "up round" financings (in which a company’s worth increased since its prior valuation) accounted for 70% of all deals. A few years ago, "down rounds" prevailed. And VCs are offering better terms that don’t require entrepreneurs to relinquish increasingly large equity stakes. More early-stage companies are luring funds as well.

Tom Taulli

Full Story: http://www.forbes.com/entrepreneurs/2006/04/12/finance-venture-taulli-cx_tt_0412taulli.html?partner=moreover