When Valuation Doesn’t Matter
Most of the time, the price an investor is willing to pay to invest in your company is a hotly debated topic. Valuation is always important to founders. But for investors there are some rare times when it (almost) doesn’t matter.
“There was a time when venture capital firm Kleiner Perkins Caufield & Byers, was the first money in hot, new start-ups. These days, it seems the best KPCB can do is edge its way into hot start-ups at a massive premium like with the funding for Twitter”.
Kleiner invested in Twitter at what at the same time seemed like a very lofty $ 3.7B valuation. Three years later, Twitter is now public and worth $ 23B. So in three years that investment has generated over a 6x return (on paper). i.e. it has doubled every year. Not too shabby.