Is There Too Much Venture Capital (or Just too Much Talking about It)?

Great post by Bill Burnham putting the whole discussion of a venture capital bubble in context. I wish I had thought of what he has done sooner, but Bill has finally grounded/normalized the bubble discussion with something meaningful. I won’t steal his thunder by restating his conclusion, so go read the piece. (And did I mention it was great? It is.)
[Update] Okay, I can’t help myself. Here is a graphed version of Bill’s data:


  1. Brent Buckner says:

    The analysis is sensitive to the composition and relative valuation of the NASDAQ. A larger amount of its capitalization may be in more mature stocks now than in 1985 (e.g. MSFT), and valuations may be higher now than in 1985. Under such circumstances, a constant ratio of VC$/NASDAQ cap could still be consistent with too many VC $s.

  2. As as a former private equity investor of funds of funds, we found the most accurate indicator of “too much money” was typically median valuations. When Series B valuations are going for $75 million vs. $30 million, inflation-adjusted, things may be getting overvalued. (Let’s forget that precision is close to impossible, but you can get directionally accurate data).
    In other words, it’s all about valuation, and less about money supply. The 2 are not independent, but it’s not too much money unless investors aren’t getting appropriate returns.