Mark Suster Partner Upfront Ventures and former entrepreneur
“ [Suster has] seen a destructive cycle where otherwise interesting companies have been screwed by raising too much money at too high of prices and gotten  [trapped] when  markets correct and they got ahead of themselves [on inherent market valuation]. 
[It’s] OK to  shoot for the “top end of normal” for the market conditions.  [He] caution[s] entrepreneurs from  raising money at significantly ABOVE market valuations. 
If [entrepreneurs] haven’t figured out product / market fit and therefore still have a highly risky business [they] run great risks for getting too far ahead  on valuation.  [Most] investors won’t want to [do] a “down round,” which creates tension between them and early investors.
 [Sophisticated] investors know [a major down round] is fool’s gold. They get a cheaper price,  wipe out much founder stock value and  reissue [founders] new options. [Founders] take the money ” except their incentives get eliminated.
 He advises “ us[ing] competition to [ensure] a fair price [and] rais[ing] a slightly higher round than  [otherwise for some strategic reserve].  [One wants] to show an uptick in valuation  for new investor confidence and to maintain [early investor relations].” Mark Suster Why Startups Should Raise Money at the Top End of Normal, June 5, 2011; http://www.bothsidesofthetable.com/2011/06/05/why-startups-should-raise-money-at-the-top-end-of-normal/