Glossary
Valuation
The price investors put on a whole company, usually implied by what they pay for a slice of it.
For a private company, a valuation is usually set by a funding round: if investors pay a certain amount for a given percentage of the company, that implies a value for all of it. Public companies are valued by their share price on the stock market.
Private valuations are negotiated between a company and a small group of investors, often with extra terms such as protection if the company is later sold for less. They are not a market price and can be hard to compare across deals.
A valuation is not revenue, profit, or cash in hand. It reflects what investors expect the company could be worth, and it can fall.
Read more: our explainer