You are comparing the required returns of two VCs who are interested in investing in the same software start-up.

- One VC fund, the Technology VC fund, has all of his capital invested in the ICT (information and communications technology) sector.

- Another VC fund, the diversified VC fund, has invested her capital in a variety of businesses.

If both VCs had the same expected cash flow estimates for the software start-up, which one would give a relatively low valuation (NPV) to this software start-up?

If both VCs decide to invest in $500 million, which one would demand a larger share of the ownership of the software start-up for $500 mil capital provided (due to lower estimated NPV and price per share)?