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SVB Analytics Research Series: Volume 3
02/04/2008. Source:SVB Analytics.
 The timing, amount, price and terms of a future round are not always known when performing a valuation analysis. Historically these unknown factors have often made determining the impact of a future round an exercise in guesswork. In order to bring some science to at least one of those variables, the price, SVB has been conducting intense quantitative research into the step-ups in value between rounds for venture-backed companies, in this, the third in their research series.
Whether you are an entrepreneur, venture capitalist or valuations service provider, there is one topic that we are all keen on understanding: future rounds and their dilutive effect. Consider a typical life science company that closed its Series A in 2007, but doesn’t expect the drug under development to generate revenue until 2014. Clearly the need for future rounds impacts the current value of the Series A shares. The entrepreneur is concerned about how the future rounds will affect dilution, and the investor is concerned about how it will affect ownership. As a valuations service provider, we have been focused on quantifying the effect of future rounds.
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SVB Analytics offers valuation and corporate equity administration services to SVB Financial Group’s core constituencies of private, venture capital-backed companies and venture capital firms. SVB Analytics’ services offerings include fair market IRC409A/FAS123R valuations and corporate equity tracking and administrative services. SVB Analytics is a member of global financial services firm SVB Financial Group, with SVB Silicon Valley Bank, SVB Capital, SVB Global and SVB Private Client Services, which serve the unique needs of technology, life sciences and private equity firms. More information on the company can be found at www.svb.com.
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