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August 31, 2011 07:58 pm GMT

WITN: The New Wrinkle on the Valuation Trap (TCTV)

It seems Sarah wasn't kidding about working right up until she givesbirth. In this week's positively-last-before-the-birth episode of Why IsThis News?, Sarah andPaulare prompted by the ongoing reports ofDropbox's mega funding to talk about valuations. The typical outrage is over whether a company like Dropbox is "worth" $4 billion, but as we argue, that's misses the point. Venture backed valuations are always a function of a company's promise and how much demand there is to invest, not what a company is worth right now.But there are reasons to worry about companies getting into valuation traps as the price tags get significantly over the $1 billion level.

Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/hU6-ph4etwY/

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