For startups seeking to join the ranks of “unicorns”- private companies with billion-dollar valuations- the venture capital climate has never been more favorable. The number of private companies receiving billion-dollar valuations has ballooned in recent years1 and as of 2015, a record 41 companies have received exactly such a valuation.2. However, these sought-after valuations are…
Author: Joe Dalia
Too Big To Succeed: How Liquidation Preference May Be Driving Unsustainable Valuations
When startups begin to negotiate for venture financing, most are primarily focused on maximizing their valuations. While founders are wise to focus on the valuation term given its importance to the company’s public perception and financial position, that focus may ultimately be leading founders to undermine their own interests. When venture capitalists (VCs) invest in…