I just want to address 'valuation' quickly for people who may not be familiar with how this is made up. Lets say I have a peanut cart, and in my sack I have 10

I just want to address 'valuation' quickly for people who may not be familiar with how this is made up. Lets say I have a peanut cart, and in my sack I have 10,000 peanuts. Some sucker comes along and invests in the peanut cart, and I sell him 1 peanut's worth of the cart for $1.00. By the usual rules of 'valuation', the valuation of my sack of peanuts is now $10,000.00. Valuation just means what someone somewhere estimates the value to be, it doesn't have to be credible. It becomes more significant when investments are made, since if an investor puts in money at a valuation of X, they are betting that the company will find liquidity at some point in the future with a valuation greater than X, or the investor will lose money (even this is not true, since they will likely have liquidation preference or other backstops to protect themselves at the expense of founders and employees). The short version is, valuation is not what the company is actually worth, or even an impartial estimate or appraisal. It is purely the amount invested divided by the fraction of the company that investment purchased (even if the fraction is small), and it ignores things like liquidation preference that let investors hedge risk when they invest money at valuations that make no sense.