Every day I read about how a company raised “X Millions” from a VC, and it is broadcast across all media outlets. The round of funding varies depending on the stage of the company. The early-stage companies have either no revenue or minimal at best, and most of these companies are selling a vision that, in today’s marketplace, venture capitalists don’t want to miss out on. There are many VCs that may have passed on Uber or Facebook or LinkedIn and feel that they definitely don’t want to repeat that mistake.
These early-stage companies are getting valuations that are astronomical in any historical sense. I recently read an article where a company that is still pre-revenue received a $200 million dollar plus valuation. These early-stage companies are typically raising $1+ million, and lately it seems like that amount has increased to $10 million+.