We’ve heard lots of talk of a bubble recently. Of course, nervous talk of a bubble is one indication that we’re not in a bubble.The sheer excitement of a hot bubbly market precludes such nervous talk, you see.

But if you want dozens of data-driven reasons why the proliferation of Unicorns (startups valuated at $1 billion or more) does NOT mean we’re in a bubble, then you’re going to like the report we’re making available for you today.

It comes from VC firm Andreessen Horowitz. Three of its partners – Morgan Bender, Benedict Evans and Scott Kupor (all great startup investors in their own right, by the way) – authored the 53-slide report.

If anybody knows Unicorns, it’s Andreessen Horowitz. Among the Unicorns in its portfolio are Airbnb, Actifio, Instacart, Jawbone, Lyft, Pinterest, Slack and Zenefits. It’s also invested in successful IPO companies Box and Twitter.

The VC firm makes a convincing case that both the amount of money invested in startups and their valuations are well below what was experienced in the dot-com bubble.

I’ll let the presentation speak for itself. But I just want to give you one piece of data it uses to illustrate its point.

In 1999, the total dollar amount that went into financing startups all the way up to and including IPOs amounted to $71 billion. In 2014? It was $48 billion. That’s 2.6% of today’s GDP. The 1990 total was 10.8% of GDP. And the number of Internet users today is 7.5 times larger than it was back then.

The presentation is full of interesting data just like the above. So click here to read this important report.

 

 

Of course, it doesn’t disprove the existence of a bubble. Nor is it the final word. And you can believe – like I do – that valuations are stretched in the later rounds, but by itself that does not make a bubble.

Lots of room for debate here.

Kudos to Andreessen Horowitz for making this timely and valuable contribution.

Print Friendly, PDF & Email