The HemoShear case is designed to provide an opportunity for students to factor in the dilution of a potential Series D round in the valuation of the Series C round. It also highlights the issue of whether venture capitalists will treat the Series D round as a fourth round of funding or as a first round of institutional funding (i.e., a Series A round). This discussion is designed to illuminate the differences between goals and return requirements of angel investors and venture capitalists. Because the evolving nature of HemoShear's technology is not well captured by the VC or DCF methods of valuation, the case also mentions other pharmaceutical companies that used real options as a valuation approach, which is designed to be discussed qualitatively within the context of the other issues addressed in the case. This case is studied in Darden's "Entrepreneurial Finance" elective. HemoShear, LLC, is a start-up firm with promising technology that can give pharmaceutical companies advanced insight into the safety and efficacy of their new drug compounds. In March 2012, the firm seeks to raise $3 million in a Series C round from angel investors to scale the business, add key management staff, and move to a new facility. Prior to the Series C round, HemoShear had raised $700,000 in two friends-and-family rounds to complete proof-of-concept studies and establish an independent testing facility; another $8.4 million was raised in subsequent Series A and Series B angel rounds to fund continued development. Although the company has made significant strides in developing its research and business, it is likely that the firm will need to raise another $10 million in a Series D round in two or three years. At that point, having exhausted the resources of local angel investors, HemoShear may need to turn to venture capitalists to raise the Series D round funding.