Buy, Hold or Sell in Venture Capital

A common rule of thumb for early investors is to start out with a start-up company by keeping the amount of money that needs to be set aside two to three times the amount reserved. This is to maintain the level of ownership among the portfolio companies of their choice and to support these companies whether they are in good or bad conditions.

Obviously, investing money for every single company is not the best investment strategy. In the venture capitalists investment list, basically get double the return. Often companies can get as much as two or three times the return, while others are crop failure.

So how do investors see your company through their investment list? What does this mean for your startup?

Investment rating

In a publicly traded market, defining the timing is a core competency that can determine whether or not you will be rewarded. As a result, analysts spend a great deal of effort building ratings on every company in their investment list, including the expected share price per share, as well as quarterly reports to companies and regular updates every time significant disclosures are made .

Although investors are more personal with their investment list business founders and often include the analysts and CFOs they cover, both groups are regularly based on the latest updates they receive, frequently Adjust expectations and company goals. Therefore, a similar trading framework can be reused to represent investor retention and liquidity strategies.


When investors believe that at current prices, investments in these companies outperform all other options available to investors, and investors allocate an “Accumulate” rating to the List Companies. The strategy in this case is to buy shares at a slightly higher level after the pro rata portion of the next round of financing.

For example, if an investor decides that a company is now undervalued, then for the next trade-off, after the company introduces outside investment, they may next be targeted to add a new round of financing or to invest Way, increase their control of the company in advance.

In more extreme cases, some fast-growing companies, which introduce competition into the next round of investment, may even ask for help from other forces to buy secondary market shares and provide convertible bridge financing . All of these aims to increase the control of the company.

to cultivate

When investors invest less than the amount they should have in the next round of financing, or even not at all, this means a “raise” rating.

In general, investors continue to make nominal investments among their investment list companies. This is to provide a positive signal. In this case, firms can gain financial support from investors to some extent, as long as their stock price stays within the “culture” range.


Unlike public markets, where investors can sell their shares of the company they hold at any time, private equity is generally not liquid. Because of this, once investors put companies in the Harvest category, it’s time for them to consider withdrawing from the company in this position.

You will enter this area only if you are: or as a founder you have already contributed very good value to your investors and investors are willing to sell the shares as exit at the current price; or not The good news is that you are seen as descending.

The so-called decline is the company will spend the property or have given up. As a founder who has not yet reached the coordination of the product and the market, you will know that you are in this subdivision. If you are advised by investors to merge or acquire talents with other companies and cancel the products, these do not represent the interests of investors Doubled to exit.

Conversely, if an investment list company’s valuation rises to a level, this represents a significant proportion of its total investor value. This may give investors a start to think about putting all their companies on the table through secondary sales.

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Investor Relations

Like a publicly traded company whose investor relations are not exhausted after a public offering, your investment does not mean it will be done after your first round of financing has been locked out.

It is always important to remember that your investors measure your value over all available opportunities and that you always need to do well and keep investors up if you want more financial support over your initial distribution Put you in the “Accumulate” part of the company classification.

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