In my experience the valuation is the starting point, rather than an extrapolation. During the investment pitch the company might say it will be worth $5 billio

In my experience the valuation is the starting point, rather than an extrapolation. During the investment pitch the company might say it will be worth $5 billion based on X Y and Z factors (like growth, market size etc), then they go out and get investors to buy little pieces of it. Note that I'm not trying to say you're wrong. It is bullshit. Rather, I'm saying that the bullshit runs very deep.