Peter Thiel on the importance of pitching your startup as a “discount to the future” Most founders will pitch their startup valuation as a sort of premium on the last round (e.g. “Our valuation last year was X, we’ve made Y progress, and now we deserve a valuation 2x greater.”) But Thiel argues that this is “completely wrong.” “The value is never a premium on the past. It’s always a discount to the future. I think the way one should always try to pitch the value of a company is by explaining why it will be worth a lot more in the future and why investors are getting to invest at a point that it’s a lot cheaper.” He uses his experience fundraising for PayPal as an example. In March 2000, PayPal raised a round at a $500M pre-money valuation, which was a massive premium on the $45M valuation from their raise 3-months prior (note: PayPal also completed a 50/50 merger with Elon Musk’s x in this 3-month period). How did they get a 5x step up in 3 months? Thiel explains: “The way we presented the round was: this is going to be the last round before the IPO. We got people thinking the next round is going to be the IPO and this was going to be at a discount to the IPO. It doesn’t matter what happened three months ago—you’re getting it at a discount to the IPO.” He concludes: “Always think of it as a discount to the future. Never a premium on the past.”