Some might call that a guesstimate
A fact that will alarm many people but is nonetheless true: startup valuations are bets by professionals that the actual value of the company is significantly higher.
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How do you personally estimate the value of a startup?
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People alarmed by this shouldn’t be investors, preferably.
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You’d be surprised how many founders are shocked to learn how investing actually works. I would say a quarter of my time mentoring early stage startups for the Korean government is spent explaining how a fund essentially has a pitch deck and their own investors, too.
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Basically a discount on future value. Whereas when people always want something more fair, I always think of this
@patio11 gem:https://twitter.com/patio11/status/578123743836303362?s=21 … -
That's an evergreen gem and very well put
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Isn't that obvious?
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Is that not true about most investments? As the buyer you see the intrinsic future value will be higher than today. As the seller you feel you have captured most of the value, or are unable to uncover it without additional input through capital, knowledge, or something else.
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Or they predict future value will increase significantly, not necessarily present value.
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Aren’t all bets probabilistic?
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