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> It's less clear to me why a valuation of over $1B matters to a private company though.

> hence public valuation would matter

There is your answer. IPO valuations have to come from somewhere, and the most recent private valuation is usually a good starting point for what investors will pay.

I'm reasonably certain that the starting point for public valuations is not the most recent private valuations. These deals are typically centered around public valuation comps (i.e. other similar companies) based off of revenues/EBITDA/etc.

Couldn't the valuation be based around both most recent private valuation, and comparatively <usefulAdjective> public companies? The bankers basically just make it up, anyway. Their goal is to just pick a number as close to what they think the market will settle on as possible. The "market" includes previous investors in the company, and also public investors of similar companies. So it makes sense the bankers would consider both markets when pricing the stock.

If you sell a car, you set the price by considering how much you paid for it and how much people are paying for similar cars. End of bad analogy.

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