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Valuation approaches to biotechnology companies by angel investors and venture capitalists often appear to the entrepreneurs to be based on voodoo rather than sound principles of finance. While there may be some truth to that perception, there is actually a very sound, somewhat complex, internal logic to the way private biotechnology companies are valued. Note the emphasis on the word “private.” This article will focus entirely on the valuation methodology of companies that are not yet listed. Moreover, the article will not consider the valuation approaches used by, say, a pharmaceutical company when it is targeting a biotechnology company for acquisition or strategic partnering. The emphasis of this piece is on the thought process or algorithm in play — the so-called “Venture Capital Method” — when an investor is looking at a biotechnology company in the seed stage or in the first or second round of venture capital funding. Full details at the Journal of Commercial Biotechnology