At a party the other day, one start-up founder told me the secret of Silicon Valley’s sky-high valuations. “I’ve had investors tell me, you can name any valuation you want, we’ll just make up for it in the terms,” he said.
His comment points to the fact that in the world of tech start-ups, the word “valuation” means something a bit different than it does for public companies. The favourable terms and generous downside protections that accompany many investments help limit the risk that venture investors take. Read more