Visualization tools startup Palantir announced a follow-on financing round yesterday, raising $90M at a claimed $735M valuation . Since most people aren’t familiar with either finance or VC math , this can generate confusion so I thought I’d do a post explaining a few things. The first is simple: do not confuse valuation with revenue . Valuation (or for public companies, market capitalization) is an implied metric based on per-share price and number of shares outstanding. For example, a public company with 50M shares and a $20 share price has a valuation of $1B. That alone says nothing about its revenue. TechCrunch makes this mistake three times in the story, calling Palantir “the next billion-dollar company” in the headline, saying they’re a “near-billion dollar company” in the middle, and at the end, saying they are close: It’s hard to imagine a billion-dollar company without a sales team, but then again Palantir is getting pretty darn close
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Beware the Spectacular B-Round Valuation