Market Comparables may also be used, where the value of a startup is estimated based upon known valuations of similar companies within the industry. This method provides a relative perspective, considering multiples such as price-to-earnings (P/E) or price-to-sales (P/S) ratios.
The rise of blockchain technology could lead to more transparent and decentralized investment models. Some VCs might adopt initial coin offerings (ICOs) as a strategy for fundraising, providing liquidity for their investments faster than traditional equity markets.
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Investment Valuation and Strategies.
The founders of ABC pitch their business to several venture capital firms and receive interest from VC Firm XYZ. After due diligence and negotiations, XYZ agrees to lead the series A round and invest $3 million, with other investors contributing the remaining $2 million.
