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Startup valuations != market cap. It's a trick VCs play. They aren't buying typical common stock. They're buying preferred stock. They won't get wiped out in

Startup valuations != market cap. It's a trick VCs play. They aren't buying typical common stock. They're buying preferred stock. They won't get wiped out in bankruptcy like typical common stock shareholders. It's a $725M minimum valuation. Not an $11B market cap - as it would be for a public company.

snird 4y ago
But it still affects founders and employees outcome, isn't it? The options strike price is usually dictated by the last round valuation - this may mean that in a possible IPO in the future many employees will find they made close to nothing
- satya71 4y ago
  Options strike price is determined by 409A valuation (if there is no secondary market) for common stock, not the preferred stock price that VCs get. Common stock is typically valued at 1/3 of preferred stock.
- theGnuMe 4y ago
  You are correct.