
Valuation Techniques ◾ 265
whose stock is illiquid (private) and whose share value is theoretical until
the company goes public or is acquired.
VC rms must be very selective in their investments. Statistics show that
of every 100 business plans evaluated by VCs, only 1 or 2 end up getting
funded. Sadly, most VC-backed rms fail. Therefore, VC investments are very
risky. To stay in business, VCs must ensure that their rare successes generate
enough prot to compensate for their frequent failures. In an effort to lower
risks, VCs utilize the investment criteria shown in Figure13.8.
What rms are most likely to meet the VC investment criteria? V ...