The risk-tolerance of investors and their desire for either low-risk or high-return investments change with market sentiments and ultimately influence how much equity an investor will seek in exchange for a given investment; the cost of capital. Risk is inexorably tied to revenues and profits. Investors in biotechnology companies seek assurances that they will receive a return on their investment. Investors will seek greater shares of equity commensurate with the perceived level of risk, which influences their expected return on investment (see Valuation in Chapter 11). In risk-averse markets an effective way to reduce risk is to demonstrate the ability to generate revenues, or preferably profits, as soon as possible. In risk-tolerant markets, where investors demand greater returns, a focus on short-term revenues can jeopardize long-term profitability by distracting management and R&D efforts from long-term value creation activities.