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  • 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
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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.)
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About The Author

William A. Sahlman

Entrepreneurial Management
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More from the Authors
  • Deborah Quazzo at GSV Ventures By: William A. Sahlman, Michael D. Smith and Nicole Tempest Keller
  • QuantumScape's Mission to Revolutionize Energy Storage for a Sustainable Future By: William A. Sahlman, Allison M. Ciechanover and Jeff Huizinga
  • Chia Network: Reimagining Programmable Money By: William A. Sahlman and George Gonzalez
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