[startingup]

I am noticing a trend lately where private market valuations seem higher than what equivalent public companies get. Of course, it is hard to find a public company equivalent of Facebook or LinkedIn, but I would say Google can be a good proxy for FB or LI.

This is puzzling at first: if private parties thought public markets were undervalued, why won't they directly invest in already public companies?

I believe the answer has to be that private parties believe private companies are relatively undervalued compared to what "they should be" in public markets - in other words, they are not undervalued compared to currently public companies, but they are undervalued compared to some notion of what they ought to be as public companies themselves.

This idea is not surprising - after all every start-up investment, almost by definition, reflects the investor's bet that they found something that is "relatively undervalued compared to its eventual public status."