Thread by @dunkhippo33

Today's tweet thread is on

What the *(&%#*(@&%(* is going on in the market???

This is my take, but I'm often wrong, but you get what you pay for. :)

Read on >>

1) First some context - last March, public stock prices plunged as we braced for the pandemic in the US.

Personally, I thought it was going to continue plunging, but it stopped & ended up rising to almost pre-COVID levels for sectors that had been HIT HARD (travel etc)

2) And for companies that THRIVED in the pandemic (Zoom, Shopify, et al), they had an enormous run in 2020!

Meanwhile, the private markets had a slightly different trajectory. In the spring & early summer of 2020, VCs basically halted investing.

techcrunch.com/2020/07/13/sec…

3) Most VCs I spoke w/ at that time had paused for a lot of reasons:

-too many personal issues were higher priority
-didn't know how to get comfortable w/ teams via Zoom
-worried about macro-conditions & wanted to save capital for their current portfolio

4) But by Q3 and Q4, VCs were on a tear again! They had figured things out during the pandemic incl how to make decisions via zoom. And tech, as a sector, was actually booming and thriving during the pandemic.

5) In addition, VCs have investing mandates. They have a certain amount they NEED to deploy into startups across 3 years.

To sit out for 15%-20% of that time is a LONG time to be paused.

6) So we started to see tons of deals happen in the late fall and winter of 2020. I've never seen so many investors so busy during the winter holidays / end of year before!

And it's a mad rush now as well! VCs must deploy all this capital they raised.

7) To the pt where I've never seen deals get done in "Silicon Valley" *this quickly*. I'm seeing companies get raises done in days if not sometimes in 48 hours.

To be clear, this is not the case w MOST cos, but for the ones who are getting financing, it's happening faster.

8) Where is this money coming from?

-Certainly from VC funds who NEED to "catch up" and deploy
-from angels who have made money w/ the rise in tech stocks & new IPOs

9) Some futuristic predictions: this boom will continue through at least the end of the yr. Why?

-More stimulus $$ on its way (& ppl seem to put this into the stock mkt ala GME which mints more angels)
-there was already a LOT of $$ on the sidelines from the last few yrs

...

10) cont...

-startups are hip and exits are bigger than ever -- everyone wants; this creates more angels
-the inet gen is old enough to have $$ & understands startups
-concerns about inflation! ppl want to move into high yielding assets to "keep up" (fred.stlouisfed.org/series/M1SL)

11) cont...

-new tools / platforms make it easier for retail investors to invest in private mkts (Angellist, EquityZen, Republic, et al)
-as we pull out of the pandemic, more optimism will fuel the mkt and economy as a whole

12) It has NEVER been a better time for founders *globally* to raise money -- EVER!

13) Words of caution:
-Not all founders are on this bubble train. This is bifurcated still - depends a lot on geo, demographics of founders, sectors
-Too much frothiness is BAD - founders will have to 2x+ valuations by next round - make sure you can do this!

14) I told one of our largest LPs this this wk:

When you see your portfolio founders receiving inbound term sheets from VCs who don't know anything about the business (incl revenue metrics), that is a BAD SIGN.

This will not end well.

15) However, I don't think the party will stop this year. But at some point, the party will stop (maybe 2-3 yrs from now), and we'll see what happens.

Of course, what do I know? Ppl have been talking about stopping the party for years now, and it just keeps going. 🥳🎉