[pc]

> Because I can guarantee you that the "valuation" of $65B+ is a totally meaningless number. This includes every single company that had a huge, unsustainable up round which will almost certainly be devalued based on future financings or exits.

"Meaningless" is hyperbolic. How much would you pay for a share of Airbnb? More than nothing, I assume. I think one can conclude something from consummated, informed responses to this question.

[lawstudent2]

No - I stand by that as a literal use.

Does 65B represent the actual money value that people will pay for the shares of 100% of the ~600 currently existing YC companies?

Does it tell us the average value? The mean? Standard deviation? Quintile distributions? P/E? Is that number just based on valuations from funding rounds? Projections?

It is literally meaningless. It is not verifiable. The standards that are used to calculate it are not explained. There is no explanation to how it relates to the companies in the portfolio.

I'm a bear by nature. I think that the current batch of SaaS unicorns have an unsustainable valuation, and I think this unverified number feeds into that.

[austenallred]

Valuation means the price that investors or acquirers were willing to pay. That someone was willing to pay that is a verifiable fact.

What the returns will be is an unknown, of course. But to say that is "meaningless" is either naive or a misuse of the word. Stock prices and market caps are decided the same way.

[gress]

Public stock prices are decided by supply-demand balance. In no way does this valuation resemble that mechanism.

[austenallred]

Public stock prices are the last price someone was willing to buy that stock at.

Private stock prices are the last price someone was willing to buy that stock at.

It is slightly less simple, because you may give a discount for advice, but private stock prices are definitely reliant upon supply and demand. If one investor wants to set your valuation at $1B and another at $100m, you go with the one who offered a $1B valuation. There is occasionally a discount for advice/connections, but the mechanism that the highest bidder wins is generally the same. Private market stocks are by no means exempt from economics or supply and demand.

[gress]

I don't know if you are making a disingenuous argument or you just don't know about liquidity, or indeed the effects of sample size on estimating a changing value, but what you've said here has no relationship with reality.

[austenallred]

How does it not?

[staunch]

The problem is using the words "valuation" and "worth" interchangeably. Just because someone pays $50 million for 5% of startup doesn't make it magically worth $1 billion. No one would actually pay anything close to $1 billion for the whole thing, hence it is not worth anything close to $1 billion. That's just the implied valuation.

[T2_t2]

AirBnB: $24 Billion. DropBox: $10 Billion. Zenefits: $4.5 Billion Stripe: $3.5 Billion. Instacart: $2 Billion Twitch: $1 Billion

Total: $45 Billion.

Source: http://graphics.wsj.com/billion-dollar-club/

So they value the rest of the portfolio at $20 billion. Does that seem reasonable?

[loumf]

I believe that they just added up acquisition amounts and the last funding rounds of each company. I don't believe that number represents what "they value" the portfolio at beyond that.

[SandersAK]

Happy to buy any shares you have in any of the YC unicorns.

[austenallred]

Especially for $0

[sskates]

You can calculate the mean yourself by taking total valuation divided by number of companies. I'll do it for you:

$65 billion / (940 companies) = $69 million / company

[aj_icracked]

Who else wants PC and Lawstudent2 to continue this debate? :) I'll bring popcorn.