Here is a good collection of question-answers related to startup financing. Here are a couple of them that seem to be frequently asked –
6. How do VCs value companies?
This is an imperfect science. A common approach is that VCs will determine what the company could be worth at the time of an exit (IPO or acquisition). They then work backwards from there, determining what percentage of equity they need to own to generate the desired returns for their limited partners. Of course, they apply this approach across a portfolio of investments expecting that a small percentage will generate significant returns.
7. How do I find angel investors for my startup?
There’s no single answer to this. In major markets like Boston and San Francisco, many angel investors are members of angel groups. These groups pool together expertise and resources in order to make better investment decisions. Of course, there are also private investors acting independently. Generally, you’ll want to find investors that have a background in the particular idea you are pursuing — or, an affinity for it. Angel investors often invest for reasons beyond just pure financial return. One common reason is to stay involved in the entrepreneurial process and help entrepreneurs build great companies.