Suspiciously Round Figures ?

While we were on vacation, Twitter raised a 100mill, supposedly at a #1Billion valuation!

As I read this, the nose twitched. What is it with the round figures ? I mean they sure do their due diligence, and Twitter probably did some work on how much cash they need. I can understand guys keeping it at back-of-the-envelope levels when doing seed stage, or even series A funding. But at this scale, for folks who're still trying to figure out monetization, sounds a little too strange. Why not 87 million (imagine how many startups you could fund for 13 mill!) and why not a valuation of 0.93 Billion ? Are these numbers arrived at through some kinda-shoulda-perhaps-maybe hand waviness ? Is there more ? Perhaps a contigency chest for an acquisition thats part of the deal but not really available unless... ?

Someone who knows the insides of these deals please throw some light. $100 million of a $1 billion valuation - it just reeks of laziness or fuzziness otherwise.

1 comment:

Indus Khaitan said...

Without any tangible revenues at hand or anything worth putting a handle on say 10x the sales or $100/user -- the investors may have arrived at the price just like buying/selling a used car. 6L nope, 5.75..achha 5.5, and do the deal.