The State of Venture Capital

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Emailed on February 8, 2019 in The Friday Forward

If you look at how much VC firms have raised from Limited Partners (LPs) over the past 2 decades you’ll see that we’ve returned to a level that we haven’t seen since 1999, which leaves many crying "tech bubble."

This week Mark Suster published a deep dive into the state of VC and why, in his perspective, we are NOT in a tech bubble. I would have to agree.

Read the full post here, but the two most interesting points in my opinion are:

  • Companies are staying private longer, and raising rounds far greater than the IPO proceeds of yesteryear. The “traditional VC” market has only grown 14% per year and mega-rounds ($100M+) now account for nearly half of the dollars in the industry. This means that value hasn't been inflated but rather shifted from the public to private markets. 

  • 2019 is not 1999, the internet is exponentially more mature. In 1999 the US VC industry raised $53 billion for a nascent internet population. 20 years later, we have 77% of the US and 56% of the world online with $55 billion raised. Not to mention, people are exponentially more connected in 2019. New ideas and companies can spread like wild fire. 

Sean SteigerwaldComment