I'm a co-founder of a small startup, and my co-founder keeps telling me that we need to hire more people because (beyond helping with the company's tasks) "the more employees you have, the more valuable the company is" (in the eyes of investors).

I never believed that was the case, am I wrong?

Which is more valuable: a company with a thousand employees that generates 100 million in profit, or a company with 5 employees that generates the same amount? Beyond the question, I understand it's very simplistic and that the value of a company goes far beyond the number of employees, but I'd like to understand how investors view employees.