A good data analysis lesson here: Make sure to use multiple Y axes if you are compared line graphs like this.<p>It is much easier to see the differences at the top of the scale than at the bottom of the scale, but that doesn't mean the shapes of the lines aren't similar if scaled properly. In fact somebody in the comments has made a version with the Y axes normalized, and the shape of the graphs are all pretty much the same, completely contradicting the conclusion the author makes (or if not, the author didn't provide enough clarity on the point he was trying to make).<p>Classic example of "not challenging your own data" [1]. A tough skill to learn when doing data analysis, because it isn't fun spending a lot of time and effort to try to prove yourself wrong.<p>1: <a href="http://danbirken.com/statistics/2013/11/19/ways-to-make-fake-data-look-meaningful.html" rel="nofollow">http://danbirken.com/statistics/2013/11/19/ways-to-make-fake...</a>
> Public markets are rational<p>Are they? If markets were rational and efficient, you wouldn't have stocks trading below their asset value. There is nothing rational <i>at all</i> about having $1B on the books that you could acquire for the company in a fire sale, and then trading as though you only have $500M. This is the basis for how value investing works and how people like Ben Graham and one of his students you may have heard of (Warren Buffett) have made billions of dollars off of this assumption. Fred's a great private/venture investor, but he's not a credible source on macroeconomic theory.
I think Fred missed lots of things here:<p>1. Series A is heating more in percentages: <a href="https://a.disquscdn.com/uploads/mediaembed/images/2217/5785/original.jpg?w=600&h" rel="nofollow">https://a.disquscdn.com/uploads/mediaembed/images/2217/5785/...</a> but all series seems to be following a similar trend, so nothing special to note.<p>2. > Public markets are rational.<p>I thought Public markets are emotional? The same chart that he is putting (the Nasdaq) with the year 2000 bubble shows pretty much how un-rational the public market is.<p>Maybe he means adjustable on the long term?
I wonder how much of the growth in valuations in the early rounds (given birken/df07's comments) is explained by the "Seed is the new Series A" phenomenon[1].<p>It's very challenging to make sense of all this. You can say "Series A valuations are higher" but does that mean higher valuations per revenue (or whatever metric), or just that the terminology has changed, or one of several other possibilities?<p>[1] <a href="http://www.k9ventures.com/blog/2015/06/05/the-seeds-have-changed-an-epilogue-to-the-new-venture-landscape/" rel="nofollow">http://www.k9ventures.com/blog/2015/06/05/the-seeds-have-cha...</a>
<i>Public markets are rational. Tech stock performance has been strong but is driven by strong revenue growth and good business fundamentals generally speaking.</i><p>I agree completely. That right there is worthy of an article. Fitbit went public two weeks ago and has a PE ratio of only 25 right now, and that is after a 30% pop in price. If this were the 90's it would have gone public with a PE of 300 or some crazy high number. Despite the high prices, markets are much more sober. I'm rationally optimistic.
Low interest rates -> search for yield by institutions -> increase of flow of funds into riskier assets (PE / VC / junk bonds / developing nation sovereign debt) -> "cheap money" for later stage funding.<p>This contrasts sharply with 1980's VC where capital was much more scarce and thus VCs were able to command more equity for less money put at stake.
From the first chart, data is only aggregated yearly, Median Series C funding only spiked for <i>1 year</i> (2014). That's not enough to establish a trend, and it's misleading when you compare to the Stock market chart which shows the data trending more continuously.
This discrepancy could be driven by the private equity brand craze. Firms buy into the Uber's, Airbnb's and Slack's at irrational prices just to say the are 'investors' when raising the next pool of money.