There terms and conditions of financing a US based versus foreign company are as different as night and day. Most US based companies have a tendency to give their companies much higher valuations than they deserve. Investors are usually split into two camps. Either they want a company that has revenues, profits and large growth potential or they want to bet on some future technology where perception is greater than the reality.

If the company has revenues and profits the biggest determining factor for valuation are the future growth prospects of the company. If the company has a new technology or medical cure the valuations are subjective and investors base the valuation strictly on future earnings projections. Investors know such companies could result in either a billion dollar baby or a complete loss of their investment. However, they are willing to take substantial risk because the rewards can be enormous. One home run allows investors to spread their risk and bet on several new technologies.

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