I have been reading up lately on Venture Capitalist as part of my research. Being always fascinated with the work they do, most of the research I do has been kind of entertaining since I like reading about startups.
From what I have read, although there are some logic behind most calculations it is not an exact science in the beginning because of the lack of products, market, viability of the product/service etc. In short, there are some guesswork and guts check in play during the inital rounds of financing.
Of course I could be all wrong since most of my information are gleamed from books and my random web browsing and reading.
