This weekend, news broke that Quora was raising at a a hefty valuation of $400 million.To normal people, that sounds high. The company is only 30 people strong and it doesn’t generate revenue. It’s also unclear how many users Quora has.
But lately, $1 billion has become the magic number. The billion-dollar startup club has grown to include Evernote and Instagram, and we’ve heard VCs are sending Pinterest unsolicited term sheets with valuations north of $1 billion.
Tech people are confused.
“Very few realise how ambitious the opportunity is,” TC Contributor Semil Shah says. “They are the ultimate outliers, a totally weird product that is still in beta and not really fit for generic metrics.” Shah says he’d put his entire 401K into Quora if he could.
Early Foursquare employee Tristan Walker agrees. “[The valuation] feels really low. So much upside here,” he tweets.
Despite all the startup hype, Quora’s valuation is right where it should be, if not on the high side. Quora has only raised a, $11 million Series A round, and that was two years ago at an $86 million valuation.
At the moment, Quora doesn’t need a ton of outside capital either. Its founders were early Facebook employees; Adam D’Angelo was Facebook’s first CTO. D’Angelo is rumoured to be investing up to $20 million of his own money in Quora’s new round.
Could Quora raise at a billion-dollar valuation? Probably. Should it? Probably not.
Something is very bubbly when I see quora raising at $400m and I think: That’s not very high.
— danprimack (@danprimack) April 23, 2012