Comment by jheriko

in some cases the value doesn't really exist. if someone owns 75% of a company from the founding, and they sell 25% for $100000 then its worth $400000 in a valuation whether the starting capital was $1000000 or $1

selling the smallest amount of share possible for the highest amount you can get can easily balloon the "paper" value of a company, but that money doesn't really exist anywhere.

it will change when things go public, but often the initial price is based on some vapourous guess like this...