[cperciva]

After you raise the first million dollars, the company is at least a million dollars more valuable, because it's the same company as before, plus it has a million dollars in the bank.

This seems a bit specious. Sure, the lower bound on the pre-money valuation for investor #2 should be the post-money valuation for investor #1, not the pre-money valuation for investor #1; but the valuation per share won't necessarily be any different.

[johnrob]

Startup valuations are not accurate. Your comment essentially proves the point: If an investor is going to fund a company at valuation X, they prefer that X is a combination of cash and stock and not purely stock. This implies that a dollar of valued startup is not worth a dollar, which should be an axiom.

A 3 MM dollar company comprised of 2 MM stock and 1 MM cash is more desirable than one with just 3MM in stock.