August 2003 (Revised May 2009)
Background Note
HBS Case Collection

Basic Venture Capital Formula, The

By: William A. Sahlman and Matthew Willis

Format:Print
| Pages:6

Abstract

Briefly summarizes the process that venture capitalists use to analyze high-risk, long-term investments. Contains information on methods that can be used to calculate valuation, share price, percent ownership, implied valuation, dilution, and option pools.

Keywords

Venture Capital; Risk Management; Mathematical Methods; Valuation

Citation

Sahlman, William A., and Matthew Willis. "Basic Venture Capital Formula, The." Harvard Business School Background Note 804-042, August 2003. (Revised May 2009.)