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Question for the field: what's the connection (if any) between late stage private valuations (Zenefits, Theranos, etc) and early-stage startup investing? Seems

Question for the field: what's the connection (if any) between late stage private valuations (Zenefits, Theranos, etc) and early-stage startup investing? Seems most popular discussions conflate the two, but it seems like they're wildly different markets. Yes, some large VC firms blur the line a bit, with seed funds and large, late-stage checks that are nearly private equity-esque. But by and large, the companies and backers involved in the seed stage are not competing with Emirati funds and PE arms to make investments. I ask because I'm raising a seed round, and occasionally investors cite the macro landscape as a check on valuation, but I can't see the direct connection. Negotiating tactic, misconception, or real phenomenon? Deeply curious....

cj 10y ago
> Negotiating tactic, misconception, or real phenomenon? I think a combination of all 3 depending on the situation. If you have a solid business with real traction, $6-7m cap is seen as very reasonable. Investors probably wouldn't cite a market downturn for deals like this, and if they do it's most likely a negotiating tactic. If you're raising money for "the next big app" with no traction and asking for a $10-12m cap, there will probably be a lot more skepticism than there would have been a year or 2 ago. Note: This is based on my anecdotal experience in the bay area market. Numbers are probably lower across the board in other cities.