Lately, I’ve written a lot about how expensive startup valuations have become. It’s gotten pretty silly in some cases.
Now I’m wondering: Are they going to get cheaper anytime soon?
Based on what I’m seeing, I’m leaning towards no. There’s too much venture capital money chasing too few quality deals.
Sure, there’s a chance that if the stock market takes a dive, startup valuations will come back down. But I also think startups will remain a highly sought-after asset class for the foreseeable future. Many investors today are looking at all the alternatives to startups (sky-high prices for stocks, bonds, real estate, etc.) and deciding that even if venture capital is a little more expensive than usual, it’s still one of the best bets available.
So I’ve decided to continue slowing my startup investing pace. I’m investing in fewer deals. But I’m also investing substantially more money when I do find a deal worth backing.
Now that I’m more experienced at picking startups, this strategy should do well. It will give me fewer chances to swing at the ball, but any hits should result in a more substantial win.
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