Everyone is wondering how VC funds have raised record amounts of money in Q1 2016 against a tenuous backdrop. The corollary: there will be too much money chasing too few deals.
The reality: Every year since 1999, most VCs have believed there was “too much money chasing too few deals”. (Investors conveniently overlooked it for a couple of years recently when tech and VC distributions picked up a bit)
Here’s a look back at 10 years of headlines:
2005: HBS Working Knowledge: The VC Quandary: Too Much Money
The VC money “overhang” continues as investors compete to get into a small number of deals each year.
2006: NY Times: A Kink in Venture Capital’s Gold Chain
Notable because Sevin Rosen, a well respected firm decided to return commitments to LPs.
Explaining its decision, Sevin Rosen, which has offices in Dallas and Silicon Valley, said that too much money had flooded the venture business and too many companies were being given financing in every conceivable sector.
2007: Seattle PI: NWVA won’t raise new fund
“I think the fund model is very broken for a variety of reasons,” said Simpson. “One, there is just too much money out there… As a result, valuations are getting bid up.
Bonus: 2007: pmarchives
pmarca:
“there are probably 200 venture capital firms within 20 miles with likely over $20 billion of capital at their disposal chasing a very small number of good potential investments, despite terrible average returns for the asset class over the last seven years.”
2008: Techcrunch: TechCrunch50
Live: Twenty Questions For The Venture Capitalists At TechCrunch50
“Today, Thiel argues, there’s too much money chasing too few ideas:”
2009: WSJ: Venture Capitalists Head for the Door
“Nick Sturiale, a venture capitalist at Jafco Ventures in Palo Alto, Calif., says shrinkage is healthy for the venture-capital industry. With so much money chasing too few good companies, some deals became valued at far more than they likely are worth.”
Bonus: 2009: Fred Wilson: What VCs Are Worrying About
“The problem with the VC industry is that there is too much money in it, too many portfolio companies, weak venture firms, and a tepid exit environment.”
2010: NYTimes: A Dim View of Betting on Start-Ups
Sean Parker:
“There’s too much money chasing too few deals.”
2011: Maveron
“With this return to optimism, venture firms are again keen to invest in high-quality startups with the potential for greatness. The result, as always in times like these, is that too much money is chasing too few good deals.”
Bonus: Bill Draper
“My take on venture capital’s problems is that there has been so much money thrown at it that it’s been overwhelming. There just haven’t been enough Facebooks and Skypes.”
2012: Bloomberg: The VC Industry Is Broken. Now What?
“This hit-driven style of investment is a symptom of too much money chasing a new type of startup, and it’s likely that venture investors will compete until much of the return is squeezed out of a hot deal”
ALERT, in 2013, animal spirits pick up a bit
2013: AllThingsD: Seven Questions for Silicon Valley Superlawyer Gordy Davidson
The phrase is given a positive spin:
“It isn’t like 1999, when there was too much money chasing too few deals. Now there’s a lot of money chasing a lot of really good deals.”
2014: Venture Capital Is Looking for Ways to Outrun the Herd
“At first glance, all of this slicing and dicing, tweeting and sleuthing, suggests that the market is becoming exuberant, with too much money chasing too few good ideas. Yet the reality isn’t quite so simple.”
2015: NYTimes: Andreessen Horowitz, Deal Maker to the Stars of Silicon Valley
“Worse, Andreessen Horowitz isn’t just a beneficiary of behavior that’s driving up valuations. If a bubble is forming, it is ultimately because too much money is chasing too few companies.”
2018: 20 Minute VC:
via: Twitter
