When raising money, you obviously want as high a valuation as possible.

But there’s a downside to a high valuation.

Reversion to the mean is the most powerful and unforgiving force in finance.

Odds are your valuation will revert to the mean.

A crazy high valuation today increases the odds that subsequent fundraises will have to be done at a lower valuation, which does two things: It can repel potential investors who don’t want to fund a down-round in an industry where up and to the right is the only accepted direction.

Worse, it can put employee equity option compensation underwater, reducing your staff’s incentive to stick around.

A crazy valuation can become the equivalent of huge antlers – too big to maintain during lean years, and coming at the expense of what you need to survive.

Sometimes a low valuation is the best valuation.

[except from an article I read, not sure where]