Wednesday, March 18, 2015

The Fuzzy, Insane Math That's Creating So Many Billion-Dollar Tech Companies - Bloomberg Business

FoMO for fun and profit

"Here's the secret to how Silicon Valley calculates the value of its hottest companies: The numbers are sort of made-up. For the most mature startups, investors agree to grant higher valuations, which help the companies with recruitment and building credibility, in exchange for guarantees that they'll get their money back first if the company goes public or sells. They can also negotiate to receive additional free shares if a subsequent round's valuation is less favorable. Interviews with more than a dozen founders, venture capitalists, and the attorneys who draw up investment contracts reveal the most common financial provisions used in private-market technology deals today."
The Fuzzy, Insane Math That's Creating So Many Billion-Dollar Tech Companies - Bloomberg Business
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