Here's an example to understand why revenue lowers your valuation. Twitter grows like crazy, adds millions and millions of users. Great, maybe it's worth billions.
But if Twitter had started charging for premium accounts, as an experiment, their revenue during the same period could have grown from $1M to $5M. Can a billion-dollar company have revenue of $5M? No. So the valuation of Twitter would have come back to earth, maybe $100M, maybe a bit more, but not "the sky is the limit" number.
It's important to remember that as brokers/agents of LPs' money, VCs price risk. The valuation of companies is distinct from that, and is normally the principal component of the pricing of the risk. However, if the market is in a mode of skyrocketing/bubbling, a larger component of the price is how much you can hype up the company before your exit, and basically trade on your own credibility/brand.
In a crude sense, it's a form of a confidence scheme...
But if Twitter had started charging for premium accounts, as an experiment, their revenue during the same period could have grown from $1M to $5M. Can a billion-dollar company have revenue of $5M? No. So the valuation of Twitter would have come back to earth, maybe $100M, maybe a bit more, but not "the sky is the limit" number.