There are two ‘Finance To Value’ rules:
- Don’t raise more money in a given financing round than you can create in incremental value during that capital window.
- Don’t let the post-money value of your round get higher than you can grow into during the capital window.
Bond investors want creditworthy companies, and stock investors want growing companies, but convertible arbitrage investors want volatile companies, because volatility increases the value of an option.
Happy Meals and Glass-Steagall, April 7, 2017, at 11:03 AM
Its valuation is that high despite the fact that it’s not profitable, and despite the fact that it has little protection from competitors baked into what it is and does.
Uber’s valuation, in other words, is a reflection of the global marketplace and not a reflection of Uber’s own durability as a company.
What Happens If Uber Fails?, March 23, 2017 at 03:00AM