Excessive focus on financial engineering and spreadsheet valuations of startups misses the point. While that kind of analysis might be appropriate for investment banking or later stage private equity, it's all smoke and mirrors, as they say, when you're dealing with an early-stage tech company.
I like the point this article makes - that when you do a deal you get an implied valuation for a company, but neither the investor nor the entrepreneur would have bought/sold the entire company at that implied valuation. The relationship is simply not linear.
Instead, a valuation really comes down to two things: How much money does a company need, and how much equity are the willing to give up in return.
The real issues in startup funding are the two variables that are used to calculate valuation: Cash (Economics): How much are is the investor paying for the shares? Equity (Control): How many shares are being issued to the investor?