This is right to some extent. A valuation is not money-- it's basically a fictitious number that the company and its investors come up with to make the percenta

This is right to some extent. A valuation is not money-- it's basically a fictitious number that the company and its investors come up with to make the percentages work to everyone's satisfaction for a round. The problem is that it's also a minimum bar to be cleared later, and if that minimum bar is not cleared it means you're in down round territory. It also in many cases sets a bar for a minimum exit for anyone but the preferred shareholders to get much of anything. A down round is not necessarily death but it very negatively impacts founders, employees, and anyone else who holds common stock or options on common stock. This in turn can kill a company not through cash flow failure but by nuking morale and causing employees to leave (as well as demoralizing the founders). I've thought for quite some time that these really high valuations are actually a trap for founders. A lot of founders have sought them for IMHO ego-driven reasons, but in the end they'll be the ones getting diluted badly in a down round. I mean... I'm not a finance geek but it's always seemed to me that founder (and employee and also possibly seed investor) interests are maximized by maintaining a reasonable valuation. With a reasonable valuation the risk of a down-round is minimized and if there is a sale it's much more likely that the sale/exit amount will clear the liquidation preference bar and something will cascade down to the common shareholders. But what do I know. I just work here. :)