Is over-valuation of a start up genuinely detrimental to the start up's future?
I believe this answer is relevant:


Why a new startup should ask a big investment company to value them as low as possible?


In brief, if founders accepted the investor offering at the highest valuation, this investor would be their last one.

But if a startup is looking for money alone, it is a bad startup.

The access to reputable investors (who valuate realistically) gives more opportunities. It includes experienced members of the board, better brand to attract candidate employees, and the track record of closing investment rounds with famous investors.