This article is completely missing the point. These valuation numbers are made up. Say you have a basket of ten oranges, ten apples and ten pears. Someone co

This article is completely missing the point. These valuation numbers are made up. Say you have a basket of ten oranges, ten apples and ten pears. Someone comes along and says, "I'll give you $20 for your oranges." You give them the oranges and put the twenty dollar bill in the basket. You now announce to the world "This basket of fruit/cash is now worth $60!" It's not. You have no basis for assuming that the market will also pay $2 per apple or pear, but you need a nice round number to shout out to the world. In this allegory, your oranges are preferred shares that may have "economic terms" like liquidation preferences and participation clauses that could make them 10 or more times more valuable than the common shares of your company. These companies that are now going through 5+ rounds of private financing often are negotiating different terms for each round. But when it comes time to issue a press release--even if they're not intentionally being disingenuous--it's easier to communicate a single number. That number is often just number of outstanding "shares" * purchase price of last funding round.