... in class VCs are professional investors who know an industry segment well, are fairly wealthy people, have pooled together money (along with money from third parties) and use their superior knowledge of an industry to ONLY invest in companies in that industry (example: www.kpcb.com, www.sequoia.com, www.3i.com., The VC method begins with the forecasts of the company's future operations, and the resulting free cash flows to leveraged equity. These cash flows represent the cash flows available to equity investors which include the VC. For many VC investments these cash flows will be identical to free cash flows to an all-equity firm because the firms being funded are often financed without any debt. The VC will then estimate the time at which it is likely that the VC will exit the investment. The VC usually will have a specific exit strategy - an IPO, sale to a strategic buyer in mind, or ...

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