How VCs Calculate Valuation (And How It’s Different From The Way Founders Do It)

Back in 1999 when I first raised venture capital I had zero knowledge of what a fair term sheet looked like or how to value my company. Due to competitive markets we ended up with a pretty good term sheet until we needed to raise money in April 2001 and then we got completely screwed. It was accept the terms or go into bankruptcy so we took the money. Those were the dog days of entrepreneurship.

Mark Suster, Both Sides of the Table

Full Story: http://www.businessinsider.com/how-vcs-calculate-valuation-differently-from-founders-2010-7