Demand is not spread out evenly among startups. A 95th percentile startup will get multiple competing VC/angel offers, which bids up the valuation. A 30th percentile startup is going to get no offers.
Furthermore, you could also say that demand is rising as well: exits from previous years means that there are a lot of angel investors out there flush with cash who are looking for the best deals.
From my experience (as an early employee at a VC-backed startup in SV), the top startups (95th percentile), are still seeing high seed valuations.
As a side-note. If someone downvotes you, they do not have an obligation to explain themselves. If I recall correctly, pg stated somewhere a long time ago that he was fine with people downvoting just to express disagreement.
EDIT: I found the link: https://news.ycombinator.com/item?id=117171
Yes it is. A perfect monopoly is very rare and i don't see any, you using an extreme case. Most importantly, the difference between company and industry disappears under conditions of a monopoly.
" A lot of the new startups that are rushing in are just noise."
That is your point of view and not a fact. This sets up my next point.
""Startups" are not a fungible product for which there are perfect substitutes.
True. Although there are many startups circling the same new hot space, after instagram, how many many new photo startups sprung up funded or not funded? SoloMo, how many startups circled this space when it was hot? I heard a VC say he is tired of hearing pitches about discovering friends nearby. Startups can be put into clusters, if you ran a k-means or hierarchical clustering algorithm on the startup scene you would see this. In these clusters is where VC's or angel investors are spoiled for choice, they may not have perfect substitutes but they are pretty darn close.
"exits from previous years means that there are a lot of angel investors out there flush with cash who are looking for the best deals."
This is just not true. Angel Investing is damn hard, have you ever looked at the return distribution of the VC industry, it is more fat-tailed than anything else. How many angel investors on AngelList have had profitable exits in the last 3yrs? I see a lot of people outside of tech with money coming in to be angel investors because its the new hot thing and they just need to put in $20 000 per company. I have seen places popup where they give you just accomodation and office space for a huge share of your business.
"From my experience (as an early employee at a VC-backed startup in SV), the top startups (95th percentile), are still seeing high seed valuations."
You are talking about extremes here again.
" If I recall correctly, pg stated somewhere a long time ago that he was fine with people downvoting just to express disagreement."
Yes, but wouldn't it make a better community if out of courtesy you did. I have seen people do it and i am impressed.
Okay. I was only saying that even though there are tons of startups, most startups are not very valuable. Given that everything follows a power law, I don't think this is just an opinion, but rather a widely held sentiment in the VC community, the Y Combinator community, and the wider SV community.
In these clusters is where VC's or angel investors are spoiled for choice, they may not have perfect substitutes but they are pretty darn close.
VCs and angels understand that it's not the idea, it's the team. There is most certainly clustering of ideas (i.e. crowdfunding, X-sharing, etc.) Yet VCs are by no means spoiled when it comes to choice of teams. There is a huge amount of variability when it comes to the quality of founding teams. The best founding teams will still get extremely high valuations, and mediocre teams will get no funding at all.
>This is just not true. Angel Investing is damn hard
I am well aware that angel investing returns suck. I'm not talking about those people. I'm talking about founders/employees who are now multimillionaires due to acquisitions/IPOs. You forget that every time a company has an exit of 30M-1B, you now have 3-10 multimillionaires. There are probably 50+ early Facebook employees who are now dabbling in angel investing after the IPO (lackluster IPO notwithstanding).
>You are talking about extremes here again.
This sentence does nothing to actually disprove my point. The whole economics of startup investing revolves around the extremes. So of course we need to talk about the startups at the 90th and 95th percentile. Your "average-case" startup never gets funding and fails, no matter what the economic condition is.
>Yes, but wouldn't it make a better community if out of courtesy you did. I have seen people do it and i am impressed.
It would be helpful, but the tone of your original post made it sound like a demand: "If can't then don't participate at all."
Note: I got a downvote, if u going to downvote at least explain why. If can't then don't participate at all because it does not help the community.