[ForHackernews]

Doesn't overpaying help pump up the company and solidify the idea that it's "worth" whatever that inflated valuation is? In other words, it's a signaling game as much as an honest appraisal?

[as27]

Yes its a signaling game in the short run. But is there a point when people realize the company has been overvalued?

[ForHackernews]

Maybe the VCs hope they will have already cashed out by then?