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Just tweeted about this last night: 1/ The data does not support that there is much of a start-up bubble - if you dig into Ernst & Young VC report: http://www.

by dkural 12y ago

Just tweeted about this last night: 1/ The data does not support that there is much of a start-up bubble - if you dig into Ernst & Young VC report: http://www.ey.com/Publication/vwLUAssets/EY_-_Venture_Capital_Insights_2Q14_-_August/%24FILE/Venture-Capital-Insights-2Q14-August.pdf http://www.ey.com/Publication/vwLUAssets/EY_-_Venture_Capita... 2/ The seed glut has subsided & declining for a while across both enterprise + consumer segments, in # of deals, and total $ (page 32) 3/ Meanwhile, VC exits from acquisitions at an all time high, $32.8B from first half of 2014, compared to $43B all of 2013 (page 17) 4/ All numbers are USA btw. Same is true for VC IPO exits, first half of 2014 $5.1B vs $8.2B for entire 2013. 5/ For US seed investments median $ raised in enterprise seg was highest in 04&05 for the past 10y. Post-05, its consistently below $1M mark 6/ Median amounts raised is lower for Series A & B as well, in the US and have been dropping since 2008 - page 46. 7/ In conclusion, substantially more exit $$ and lower median $ in. No bubble. If your CEO is spending too much money, it's your problem.

foobarqux 12y ago
> In conclusion, substantially more exit $$ and lower median $ in. That's a bizarre way of defining a bubble.
- dkural 12y ago
  A16Z, Bill Gurley etc. saying startups are spending too much money, and in inefficient ways, and thus there is a burn-rate bubble. I'm running with their definition and saying that, if 1) VCs give less money to companies - i.e. their max is spending is capped, 2) the companies are able to exit for more $, this issue is certainly not showing up in the data.
  - api 12y ago
    Bubble is perhaps an overused term. It has a specific meaning: an investment feedback loop driven by herd effects coupled with a hidden underlying reality of diminishing returns. There may be a bit of that, but the thing I hear Andressen and others complaining about is like you say, burn. In that case it's a case of a liquor store owner complaining about drunkenness. VC money fuels a culture of hyper-deflationary short term "dumping" of free stuff into the market to fuel short term exponential growth. This is basically killing any opportunity for revenue anywhere but the extreme enterprise high end-- where costs are highest, sales cycles are slow, and huge teams with high burn rates are needed to address the market. Rinse and repeat. I'm not sure that's a bubble... More like a tragedy of the commons.

by dkural 12y ago

foobarqux 12y ago

> In conclusion, substantially more exit $$ and lower median $ in. That's a bizarre way of defining a bubble.

dkural 12y ago
A16Z, Bill Gurley etc. saying startups are spending too much money, and in inefficient ways, and thus there is a burn-rate bubble. I'm running with their definition and saying that, if 1) VCs give less money to companies - i.e. their max is spending is capped, 2) the companies are able to exit for more $, this issue is certainly not showing up in the data.
- api 12y ago
  Bubble is perhaps an overused term. It has a specific meaning: an investment feedback loop driven by herd effects coupled with a hidden underlying reality of diminishing returns. There may be a bit of that, but the thing I hear Andressen and others complaining about is like you say, burn. In that case it's a case of a liquor store owner complaining about drunkenness. VC money fuels a culture of hyper-deflationary short term "dumping" of free stuff into the market to fuel short term exponential growth. This is basically killing any opportunity for revenue anywhere but the extreme enterprise high end-- where costs are highest, sales cycles are slow, and huge teams with high burn rates are needed to address the market. Rinse and repeat. I'm not sure that's a bubble... More like a tragedy of the commons.