Did Dropbox and Airbnb just get a major boost in their valuations?
It came in a casual, everybody-knows-that aside in a blog post written by superstar investor Paul Graham, who took an early stake in both companies through his startup-coaching program, Y Combinator.
Graham noted that most of the returns in startup investing come from a handful of winners, and his portfolio was no exception. He wrote:
The total value of the companies we've funded is around 10 billion, give or take a few. But just two companies, Dropbox and Airbnb, account for about three quarters of it.
(Graham recently embroiled himself in controversy by singling out the venture-capital arm of Google for criticism, so it's a good time for him to call attention to his investing track record.)
A year ago, Dropbox was worth $4 billion. And Airbnb was worth $1.3 billion. So that's a 42 percent jump in their valuations—at least according to one of their most prominent shareholders. (Y Combinator's stake in companies varies, but it's usually around 7 percent.)
As far as we know, the companies haven't raised money since their latest megarounds. So what's Graham going on?
One possibility is secondary markets which trade the shares of private companies. SecondMarket, which lost a major source of business when Facebook went public, reportedly trades Dropbox shares.
Another possible source of valuation figures are the 409a valuations companies must do when they issue stock options to employees, though for abstruse legal and financial reasons, those numbers can often come out lower than a company's most recent venture-financing valuation.