There is So Much Money Sloshing Around

A billion-dollar valuation for a private company used to be so special that they had a special name for it. A unicorn.

But what used to be extraordinary is now commonplace. More private companies are running a four-minute mile than ever before.

In The State of Venture, CB Insights shows there were 136 newly minted unicorns in the second quarter. This is 167% more than the previous quarterly record.

With the amount of money pouring into the space, it seems like this trend of billion-dollar private companies will continue. There was $156 billion in global funding in the second quarter alone. That’s equal to the entire year’s worth of funding in 2016.

There were 390 mega-rounds in Q2, more than all the $100 million deals done in 2017.

Median valuations at every funding stage are at an all-time high, confirming what Keith Rabois said about VC funds lacking pricing discipline.

1 of every 5 venture dollars in Q2 went into fintech, and I gotta tell you, I’m thrilled by this development. I’ve been trying to refinance my mortgage since February, and the process with a major bank has been an absolute nightmare every step of the way. No doubt this will get cleaned up over the next few years as new technology replaces outdated systems.

This one surprised me. There have been ~17,000 exits since 2016. Only 5% of them came public. The other 95% was M&A.

There are two ways to look at the amount of money sloshing around.

  1. The future is exciting, and I can’t wait to see what gets built.
  2. This will end badly.

I lied. There are many different ways to look at this, but most people have binary reactions to this type of stuff. I guess for me the big takeaway is that this is permanent. The activity and dynamism of private markets are not going away. If a global pandemic couldn’t knock this train off its tracks, it’s hard to see what does.


State of Venture

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