backers must first agree on what the fledgling firm is worth. This figure
is termed "premoney valuation," regardless of whether the company needs an
initial cash infusion (the seed round) or is ready to IPO after several
rounds of backing.
At the VentureOne '99 Summit last month in San Francisco, President and
CEO David Witherow provided the most recent hard data on what he called
the "art, mystery and magic" of valuations. Notably, the value of a
startup has risen dramatically, reaching a median value of $17 million in
1998. But returns have also spiked P the value of pre-IPO firms has
tripled over the past five years, reaching $168 million in 1998.