Perhaps we need four categories instead of three -- are you an indie, angel or venture company, or a king?
One would image tech startups are experiencing progressively lower capital requirements to reach market, yet we (seem to) see funding numbers going up in size and frequency.
Higher education costs keep going up while the marginal benefit of those extra dollars are lost. Is a university that raises prices 8% in one year giving you an 8% better education?
I suppose thats what happens when money becomes available in a system. It gets spent and the benchmark is moved up. One is driven by VC's and the other is by government backed loans.
Realistically though, we probably will have to raise at least some angel money at some point; but we're not even actively seeking that yet. Once we have a product shipping, and have it in the hands of a customer or two, we'll know a lot more about what needs to happen next. Who knows, maybe we can get that first big deal, and stick purely to organic growth, funded by actual revenue. Wouldn't that be great?
Don't get me wrong -- there is nothing inherently wrong with high valuations if everyone is aligned in exit expectations. The problem is I don't think the alignment is there in many cases.
Keynes' quote is appropos: Worldly wisdom teaches that it is better for reputation to fail conventionally then to succeed unconventionally.
Many of the insane valuation is herding instinct. When the market crashed in 2000-2, lots of shrugs and expressions of "Hoocoodanode?"
If that's the case, it seems VCs have relaxed their criteria for what makes a startup a potential IPO candidate.