Reply to post: Re: Here here

SEC chair blasts Silicon Valley for its hokey valuations

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Re: Here here

There are many problems with 'unicorn' valuations, even if it superficially looks like private investors playing with monopoly money.

A big one one is employee stock compensation. These companies are hiring employees with promises of stock options or RSUs (essentially stock grants). That's a major part of the compensation. They are taxed on the claimed value, as if it's income. They have no way to find out what the stock is really worth. They must rely on the board, which unquestionably owes them a fiduciary responsibly to act in their best interests.

Does anyone believe that the regular employee shareholders are being treated equally when a $10M investment gets 1% of the company (plus a hidden term 10x warrants to buy more shares at a much lower price, plus a payback of the investment amount with interest, plus a seat on the board, plus a requirement to buy 'IP' from a third party that the VC owns)?

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