[AlexC04]

I'm not actually sure I agree with this.

Consider that the people & companies investing in pre-IPO U$1B companies are extreme expert investors. They take the risk on.

Now if we're talking about post IPO, then actual financial regulations kick in and market-traders are afforded the protections that they have now (which is still sometimes significant)

Imposing additional regs on a 'privately held' company simply because they accepted enough money to give them a U$1B valuation punishes them for growth.

Additionally, valuations are sometimes voodoo calculations for example (and someone else can check my math) but is someone gave me $1 for 1/10,000,000 of my company, wouldn't that be a billion dollar valuation?

Obviously not a credible one - but - where's the line? $1M for 1/1000? It's still not a billion real dollars.

If you look at linkedin's valuation it's based on current potential for future revenue. But revenue that is like 10 or 20 years in the future. (reference: my foggy recollection of Peter Thiel's lecture in Sam Altman's startup school)

Maybe I'm confused as to how valuations actually work.

[financedfuture]

Sure, valuations are "tricky", but you could still impose regulations on the amount of invested capital (e.g. only regulate after >U$200M is invested).

Also, stating that `U$1B companies are extreme expert investors` is certainly an overstatement. What often happens is not even reliant on expertise or due diligence, but networks and insider "games".

[st3v3r]

"Consider that the people & companies investing in pre-IPO U$1B companies are extreme expert investors"

And regular employees getting paid in options.

"Imposing additional regs on a 'privately held' company simply because they accepted enough money to give them a U$1B valuation punishes them for growth."

No, it doesn't. It shows an acceptance of reality.

[AlexC04]

> And regular employees getting paid in options.

Ahhh... That makes more sense to me.

> No, it doesn't. It shows an acceptance of reality.

Fair point. Consider my mind swayed.

I'm not sure valuation is the right meter stick, but as another point in the thread, total $$ raised might be closer to the right answer.

There is probably something there.

[maxerickson]

It wouldn't be to protect just the sophisticated investors but also stakeholders that rely on the company in other matters.

How to set the bar would be an issue.