Can you please share with us some resources (if you may have) on how these companies are valued? What metrics, parameters are taken into account while evaluating a company's worth?
As far as I understand it, it is based on educated guesswork. The idea is that you make a prognosis of where you think the company will be in the coming 5-10 years, and how much money they will be making at that time.
To aid your guesswork you look at the state of the market the company will be in, and if possible compare it to similar companies.
Once you think you have an idea of what the company will be making, you can calculate its worth. The worth of a company is usually between 5 and 15 times its yearly profits (depending on the market), multiplied by some risk factor.
Though in practice this is hard because early-stage companies invest most/all/more of their profits back in to the company to allow it to grow. And ofcourse estimating risk is also a very hard thing to do.
This is the process as far as I understand it. If you think I missed something or got something wrong please let me know. Also remember this is more a science than an art, most of these parameters come from experience and gut feeling.
Thanks!