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Silicon Valley Faces Private Sanity Check – WSJ.com

Silicon Valley Faces Private Sanity Check

By ROLFE WINKLER

A wave of sanity is washing over Silicon Valley after Facebook’s FB +3.00% listing debacle, and that may be bad news for private companies looking to raise money. Suddenly, investors seem to care about business fundamentals again.

Instagram surfed the wave perfectly. Despite having no revenue, it sold itself to Facebook for cash and stock currently worth $920 million. But the new focus on fundamentals makes it trickier for hot start-ups like Twitter,LivingSocial and Square to justify the peppy private valuations they have recently received or are seeking.

via Silicon Valley Faces Private Sanity Check – WSJ.com.

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