How to value a private unicorn
Key takeaways
- Private valuations come from priced funding rounds, tender offers and secondary trades, not from a continuous market.
- Post-money and pre-money figures differ, and sources sometimes quote different ones for the same round.
- Preferred share terms can make the same headline valuation worth different amounts to different holders.
- Always compare price with recent revenue, growth and comparable public companies.
A private company has no share price quoted every second. Its headline valuation is a negotiated number that reflects one transaction at one date.
Where the numbers come from
- Priced funding rounds: the price per share paid by new investors multiplied by the fully diluted share count.
- Tender offers and secondary sales: prices agreed between existing holders and buyers, sometimes at a discount or premium to the last round.
- Reports and leaks: media reports of talks, which may be unconfirmed and can change.
Pre-money and post-money
Pre-money is the value before new capital is added and post-money is the value after. A single round can be reported with different headline numbers depending on which is quoted. For example, reporting on OpenAI in 2026 cites different figures for its previous valuation depending on the source.
Why headline valuations mislead
- Preferred shares may carry liquidation preferences that common shares do not.
- Round terms can include structures that raise the headline price without changing the economics.
- Old valuations become stale quickly in fast-growing sectors.
A practical checklist
- Identify the date and type of the valuation and whether it is pre-money or post-money.
- Check the share class being bought and the preferences above it.
- Compare the implied multiple with revenue, growth and gross margin, where disclosed.
- Compare with listed peers and with recently completed IPOs.
- Consider the discount for illiquidity and for the uncertainty of the exit date.