When you raise money, you are taking a gamble on the future. You expect that your current situation will be improved with an inflow of cash that allows you to p

When you raise money, you are taking a gamble on the future. You expect that your current situation will be improved with an inflow of cash that allows you to pursue an opportunity higher hurdle rate. If any of those assumptions were wrong at any point including general macroeconomic issues (like beta), then you are stuck. If an investor has faith that those false assumptions could be reversed or are irrelevant, then you get additional funding. Valuations are just what everyone is willing to cope with.