Also, stating that `U$1B companies are extreme expert investors` is certainly an overstatement. What often happens is not even reliant on expertise or due diligence, but networks and insider "games".
And regular employees getting paid in options.
"Imposing additional regs on a 'privately held' company simply because they accepted enough money to give them a U$1B valuation punishes them for growth."
No, it doesn't. It shows an acceptance of reality.
Ahhh... That makes more sense to me.
> No, it doesn't. It shows an acceptance of reality.
Fair point. Consider my mind swayed.
I'm not sure valuation is the right meter stick, but as another point in the thread, total $$ raised might be closer to the right answer.
There is probably something there.
How to set the bar would be an issue.
Consider that the people & companies investing in pre-IPO U$1B companies are extreme expert investors. They take the risk on.
Now if we're talking about post IPO, then actual financial regulations kick in and market-traders are afforded the protections that they have now (which is still sometimes significant)
Imposing additional regs on a 'privately held' company simply because they accepted enough money to give them a U$1B valuation punishes them for growth.
Additionally, valuations are sometimes voodoo calculations for example (and someone else can check my math) but is someone gave me $1 for 1/10,000,000 of my company, wouldn't that be a billion dollar valuation?
Obviously not a credible one - but - where's the line? $1M for 1/1000? It's still not a billion real dollars.
If you look at linkedin's valuation it's based on current potential for future revenue. But revenue that is like 10 or 20 years in the future. (reference: my foggy recollection of Peter Thiel's lecture in Sam Altman's startup school)
Maybe I'm confused as to how valuations actually work.