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Venture Capitalists and Stock values?

Hi,

I'm taking a class where I need to pitch a pharmaceutical product (start up) to VCs. We're asking for $38 milllion. What percent would VCs expect to get as a return on investment?

Thanks you!

4 Answers

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  • M
    Lv 6
    9 years ago
    Favorite Answer

    Venture capitalists are willing to take massive risks and want to be rewarded. Most want to see greater than 20% annual returns, but they can increase that rate of return by going public or selling the company off as soon as possible.

    The most important thing that actual venture capitalists look at is the entrepreneur giving the pitch. If the VC is confident in the entrepreneur, believes in their ideas, and the entrepreneur seems driven and has put in a lot of planning and focus into the business plan, then the VC will most likely give the money.

    The business plan and return projections just help to explain the business and show that the entrepreneur is professional and prepared.

    Keep this in mind as you put together your presentation.

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  • Anonymous
    9 years ago

    Ordinary businesses usually look for 15% return at least from investment in new business.

    Venture capital companies will look at 40%+ return per year. This is due to the increased risk they are taking.

    The more risk or resources they have to put into the deal, the higher the return they will want.

    The important thing is to show them how they will get their money out.

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  • 3 years ago

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  • 9 years ago

    In my experience, venture capitalists will take whatever they can get. You will probably be asked to give up control, in which case you will take whatever you can get and be forced into many onerous agreements. Good luck.

    Source(s): experience
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