Valuation Without Revenue is Pure Narrative

“It was a good time to start planning what would be our biggest funding round to date. The delays to our launch, coupled with our incredible growth rate, meant we needed another $20 million to get us through the next two months. For the first time, we weren’t worried about whether we’d get the money. Ever since the media had pounced on our story a month earlier, Chris Bataillard of J.P. Morgan had been inundated with calls from potential investors. “This is going to be very straightforward,’ he told us. One of the first things we had to decide was a new valuation for the company. As always, this was a bit of a guessing game. Since we were still a.company without sales or profits, it came down to one question — what were people prepared to pay? Because of the buzz around us and the internet in general, we decided to double our pre- money valuation to $150 million and see what happened.”

“Patrik was silent. I knew what he was thinking. Before Viant had brought us back down to earth, he and I had talked about possibly doubling our valuation in the next round. It wasn’t easy to let that go. Bataillard sensed our hesitation. “You haven’t achieved anything since the last round,’ he said. “Actually, the story is a lot worse. You should be grateful the valuation isn’t falling.’”