Jacob Silverman writes about the new found love of venture capitalists: Media. I don’t agree with many of the points and assertions in this one but it certainly makes for a good read with some interesting insights. For instance, on startup valuation:
Before sending out a term sheet to potential investors, Blumberg has to decide how much his company is worth. The number his team comes up with is $10 million—an essentially arbitrary figure, as he’s quick to admit. “The valuation, like everything in this startup world, is a story you’re telling,” Blumberg says. It’s a promise of future growth. The value isn’t, in any familiar sense, real. But all this is typical for a startup, especially in the midst of the present tech bubble.
I remember speaking to a friend about this recently and recalled his emphasis on ‘vision’, because valuation isn’t about the numbers but about the vision he said.