Chris Dixon discusses rising startup valuations & potential startup bubble

I think it's just like real estate purchased for renting out: People know you can make money on it, people realize that, so invest in that knowing rental income can at least pay for the mortgage (in some markets). So all the low hanging fruit are gone as people are not afraid of investing in these companies. You have to go for less low hanging fruit and invest more to get your piece of the pie.

The idea of a valuation of a private company is possibly also the issue. Who says a company's public market cap (which is what valuation is supposedly mirroring) has anything to do with what a private company sold part of itself for.

I'd say in general, if X was the cost of 10% of a business, that's not saying you could actually buy it for 10X. You might actually have to pay 20X to buy the whole thing or perhaps only 5X.