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If we apply a 15-times-revenue multiple (higher than that of Google's 11) to estimated revenue of $350 million–and let's assume, for the moment, that multiple based on Facebook's extraordinarily high monetizing potential (see "Facebook's Monetization Strategy")–then Facebook's optimistic valuation turns out to be $5.25 billion.
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Here the valuation routine turns a little more subjective.
That valuation turned on some rather aggressive present-value calculations.
Considering synergistic valuations turns the allocation problem into a computationally hard optimization problem that generally cannot be approximated to a constant factor in polynomial time.
For every Facebook, Groupon or Zynga, known for its Farmville game, there are scores of lesser-known start-ups like Mr. Morin's that are raising millions in financing at steep valuations, turning computer programmers into paper millionaires overnight.
When that happens, consumers will realize they don't need so many me-too products around them, and as the interest rates begin to rise again and VC vintages are over, we may see valuations turn the current game much more "interesting" — or perhaps even a much less friendly term.
Rose held that high valuations sometimes turns off potential investors, and then brought up how he had passed on investing in Pinterest at a $5 million valuation, as an example.
But for cross-industry deals, relative changes in valuation can turn a buyer into a seller, as About and Primedia have found.
It should be noted that with the same yardstick, the valuation may turn out differently in other countries, i.e., where lignocellulosic biofuels are seen as compatible with farming values and agricultural systems.
Higher valuations, in turn, should spur firms to invest more; rising house prices should encourage more construction; and greater wealth should lead people to spend more.
The site had been on the block since late June and drew a lot of attention for outlandish valuations that turned out to be closer to the truth.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com