Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open.

How are investment funding valued when invested in a company before it goes public?
This is a question of how does someone value a business.   Typically, it is some function of how much the company owns, how much the company owes, how risky is the company's business, and how much the company makes in profit. For example if a company (or investment) make $100/year, every year no matter what, how much would you pay for that?   If you pay $1,000 you'll make 10% each year on your investment.  Is that a good enough return?   If you think the risk of the company requires a 20% payoff, you shouldn't pay more than $500 for the company.