How venture capitalists approach valuation

Venture capital is the equity investment to help early stage companies that have no product, order book or revenues, no free cash flow, no significant assets and no chance of getting bank loans, asset finance, development capital, factoring etc. But do have an entrepreneurial team with a compelling technology and a big idea that could make a lot of money. Venture capital selection criteria include: fit to investment strategy; potential of company to get to a valuable exit; potential for required returns. The article focuses on how venture capitalists approach valuation. VCs need to take a view on company value when buying (for first and subsequent times), holding (portfolio valuation), and when selling. (15 pages)