Stripe raises $600M at nearly $36B valuation

To build intuition for this, here's a contrived example. You own a widget-making company, and they're very successful: you get a profit of $1 for each widget sold, and each widget factory produces 1 million widgets per year. You currently have one factory, for a profit of $1M/year, and a new factory costs $8M to build. Suppose that four factories are enough to supply the world's widget needs, in which case you'll eventually be making $4M/year.

If you don't raise any money at all, you'll be able to build a second factory after 8 years, a third factory after 4 years, and a fourth factory after another 2 years. At that point you're making $4M/year and no longer expanding. Hooray! After 14 years of putting all the profits into making new factories, you can enjoy watching the money flow in.

Now suppose you were able to convince investors to give you $24M to build three more factories immediately, in exchange for some percentage of the business. You're immediately making $4M/year, minus whatever percentage goes to your investors. If the percentage that the investors get is low enough, this has a higher net present value to you than the slow-and-steady approach described in the previous paragraph.

Now what if investors aren't convinced enough to give you $24M, but they will give you enough ($8M) to make one factory? Well, you could open that factory, show investors that you're making double the profits now, and maybe that'll convince them to invest more now that your business has proven itself. There may even be multiple rounds of this. The rationale is the same: by expanding your business faster, you expand your revenue faster.