Remove 1999 Remove Cost Remove Metrics Remove Valuation
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Praying to the God of Valuation

Both Sides of the Table

Something happened in the past 7 years in the startup and venture capital world that I hadn’t experienced since the late 90’s — we all began praying to the God of Valuation. And then in the late 90’s money crept in, swept in to town by public markets, instant wealth and an absurd sky-rocketing of valuations based on no reasonable metrics.

Valuation 466
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It’s Morning in Venture Capital

Both Sides of the Table

Cloud computing and the open source movements have brought down the costs of starting a company by more than 90%. They need a combination of capital and experience to separate from the rest of the pack – the low cost of starting a business means it is even more vital to become the market leader more quickly.

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On the Road to Recap:

abovethecrowd.com

One key to this population growth has been the remarkable ease of the Unicorn fundraising process: Pick a new valuation well above your last one, put together a presentation deck, solicit offers, and watch the hundreds of million of dollars flow into your bank account. By January of 2016, that number had ballooned to 229.

IPO 40
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Andreessen Horowitz: No bubble but rebalancing from IPO to late stage venture

The Equity Kicker

Firstly this table comparing 1999 and 2014 on key bubble-related metrics. That makes sense, but it looks to me as if they have less valuation discipline than we normally see in either the public markets or in smaller venture rounds. The whole thing is well worth a read, but two slides stood out for me.

IPO 60
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$20,000 in 2020: Bitcoin’s Point of No Return

thebarefootvc

Like him, many retail investors were drawn into nonstop television coverage and headlines that were (to me, scarily) reminiscent of 1999. Guggenheim CIO Scott Minerd appeared on Bloomberg TV and put a $400K price on BTC, based on its “scarcity and relative valuation of such things as gold as a percentage of GDP”. All in one day!

SEC 45
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Turing Distinguished Leader Series: With Partner David Zhang, TVC

ReadWriteStart

When you put those two things together, you get high-quality customers, high LTV, and acquisition at super low costs. Do you have other efficiency metrics that you look at when you evaluate businesses to check the quality of growth and the quality of the revenues? That’s a valuation number and pricing number. Yeah, yeah.

Partner 132
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In Defense of the IPO and How to Improve It, Part 2: Peeking Behind the Pop

Ben's Blog

And no, that doesn’t mean that the IPO is underpriced; recall that there is no cost to putting in an “order” in the IPO book, so the incentive for the buy-side is to put in as large a request as possible with the understanding that they will ultimately be cut back by the underwriters. Are bankers simply irrational?

IPO 36