How To Invest In Private Companies

There are so many elements today in our lives that make things more and more hectic by the day, and there hardly seems to be any respite from the constantly mounting pressures and tough competition to stay ahead of everybody, plan for the future, etc. However, this has also led to rising stress-related issues, blood pressure, etc. While one cannot simply sit at home to avoid all this, a bit of humor has always helped in bringing cheer to one’s day.

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Public Vs. Private Tech Valuations: What's Driving the Divide?

It is not uncommon to see private companies valued as high as 100 times revenue in late-stage funding. Unicorns, which have become synonymous with tech companies valued over $1 billion, are now receiving blowback after the former Silicon Valley darlings lost their luster on the public market. Just this past year, a number of companies and boundless unicorns saw their values slashed leading up to going public. Before its IPO, Square Inc. (SQ Square Inc 36.89 +2.27% ) was valued in the private market around $6 billion. As we know, the payment company IPO’d at slightly more than half its private value and has watched the stock plunge over 20% in its relatively short existence. Unfortunately, determining value can be difficult with the recent glut of hyper growth start-ups. A valuation for a private or public company follows similar mathematical procedures, but private companies often do not disclose key financial information. That said, the mind-boggling valuations over the past five years are more indicative of the markets than the true value of the company itself.

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