When a VC fund invests in a startup company, it's important to understand what phase the company is in and its growth trajectory. The earlier the investment phase, the riskier it is deemed to be. Therefore, a VC fund investor would be looking for more reward for doing this. Often in the early stages of a startup, it's difficult to determine a valuation of the company. This can be because the company is very new and it's still determining proof of concept of its products. It doesn't have sales or profits or cash flows to back up a traditional valuation. It will need investment to fund its initial growth before it can start to generate those sales. So it is hard to determine a valuation at this point. However, the company may still well attract investors by offering access to equity at a price to be determined in the future once the company is operational and generating sales and hopefully profit. At this point, we can also remind ourselves what a later stage investment would look like. Typically, a company has been established and conducting business later. Stage investments are typically in companies generating sales and hopefully profits. And the client base will have been determined, as in the company will at least have a small client base from which it plans to grow. It needs investment to expand further or deliver on the existing growth plan. And it is easier to determine a valuation at this stage as the company can be compared to peers using financial metrics, and it is able to attract investors with a set valuation and by offering equity.