> There valuations are always based on expectations of huge growth, not current value.

They're primarily a function of fund size. Everything else that can be fudged is fudged in order to make it look sane.

Funds make their money by taking a cut of AUM. Thus, they're incentivized to make bigger funds. They also can't spread out their portfolio over hundreds of tiny investments without losing control, so they need to write big checks. When you write a big check, the founders need a big post-money number to maintain a reasonable percentage of the cap table. QED.

As money flooded into VC, the funds got bigger, the checks got larger, and the number of unicorns shot up in direct proportion to the number of large funds competing for their equity. The revenue projections used to justify this charade were never really important, and couldn't be proven in any case.