Have you ever wondered how WeWork, valued at $47 billion in January 2019, fell to $12 billion in September of the same year when they planned to IPO? As tech unicorns, privately held companies with an initial valuation over $1 billion, become more and more commonplace, it is important to ask if these valuations are accurate or if they are artificially inflated without regard to their intrinsic value.

Venture capitalists are not looking to invest in companies and run them into perpetuity. Their business model is to invest in numerous companies, double down on companies that do well, and sell them for a big payday. The only way this model works is when their portfolio companies are successful in raising capital at higher valuations in each subsequent funding round. READ MORE