Getting headlines for a big increase in valuation is a sure way for private tech companies to lure investors and employees. But rising headline valuations don’t always mean that each share has risen in value–and some may not translate to investor gains at all.
Take MongoDB, which early last year raised an $80 million round that was reported to have valued the company at $1.6 billion, up from $1.2 billion at its previous fundraising in 2013. But the shares were sold in the new round at the same price as the 2013 round, according to data from PitchBook. That means existing investors did not see the value of their stakes rise.