Valuation of the company is determined by supply and demand (of the company itself in the form of stock). Supply is of course limited; companies will only rais

Valuation of the company is determined by supply and demand (of the company itself in the form of stock). Supply is of course limited; companies will only raise a few 100K$ max in a seed round. Demand on the other side, is largely decoupled from how the company is doing in the market since its just too damn early. In other words, the only things that matters at this point are the founders and the market. If there is high demand, companies can raise their market cap. When companies struggle to raise money, they lower their cap. Established business can use revenue as an indicator to potential investors. This makes little sense to companies that have a few months of revenue total.