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      "text": "Investors should understand and be able to explain divergence to entrepreneurs. Once entrepreneurs realize that their assumptions about investors' returns based on the company valuation at exit may be off by a factor of 3x to 5x, negotiations become easier. If neither side understands divergence, then negotiations can easily deteriorate and become contentious.\nIn general, educate before you negotiate. In addition to divergence, be able to explain the rationale for a 1x participating liquidation preference, for example, or the implications of pre-money valuation.",
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      "text": "In the end, the practical determinant of valuation is the market. Always use market conditions as a starting point in financing negotiations. As another article in this collection shows, median pre-money valuation of venture capital seed-stage enterprises has varied over a narrow range between $1.7 million and $2.5 million since 2002.",
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      "text": "Market Valuation",
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      "text": "Concluding Suggestions",
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      "text": "Investment Valuations of Seed- and Early-Stage Ventures (continued)",
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