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"They will go in with a high valuation and say 'I am spending a fortune on advertising and will get you the best price'.
"You can't sit here with a high valuation, when everything else is crashing around you," said Kathleen Smith, a principal at Renaissance.
"You can't sit here with a high valuation, when everything else is crashing around you," said Kathleen Smith, a principal at Renaissance Capital, which tracks and invests in I.P.O.'s, told The Times on Saturday, before the market turbulence picked up this week.
"Historically its been a low-margin company with a high valuation multiple, and that disconnect has always been the basis for my caution," he said.
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It's also not the only crowdfunding company that has raised at a high valuation, with Tilt raising a financing round at a $400 million valuation, as previously reported by TechCrunch.
Entrepreneurs think that raising money at a high valuation or with a high cap is a badge of honor, but raising money at a high valuation also prices you out of exits and makes it harder to raise follow-on capital.
But raising money at a high valuation comes with its own unique set of challenges; it increases the "Preference" (the private equity raised all gets paid back before Common shareholders, the founders and employees get a dime), and it adds increased pressure for performance to justify the price.
With a higher valuation, Tableau's IPO brought in more money and established a larger public float than would have been possible a year ago.
At this price, Renren is valued at $5 billion, a high valuation for a company with 2010 revenue of only $76.5 million and operating income of $17.3 million.
The usual defensive dance then began, with Cadbury arguing its performance warranted a higher valuation, while at the same time searching for rival bidders.
And M&T's stock has traded with a relatively high valuation, illustrating investor faith in the bank.
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