Tags: Komisar | stock market | valuations | venture capital

Venture Capital Heavyweight Komisar: 'We're Getting Ahead on Valuations'

By    |   Saturday, 27 September 2014 04:04 PM

Two years ago, rumblings started to emerge from venture capital market participants that the market was getting frothy. And now the chorus is growing louder.

In the first half of 2014, 14 U.S. technology companies were valued at $1 billion or more, more than double the total for 2013, according to researcher CB Insights.

"We're getting ahead on valuations," Randy Komisar, a partner with the legendary venture capital firm Kleiner Perkins Caufield & Byers told CNBC.

So what exactly are the problems? "There's too much capital and there's very few places to invest it," Komisar said. In addition, investors are taking too much risk.

"The mega winners, while they have low probability, have had such great returns that they tend to be the best bets that the market's made in Silicon Valley certainly in the last decade," he said.

"So that sort of investing—very, very high probability of failure, but very, very extraordinary returns on the winners—drives people to take risks differently."

Venture capital star Marc Andreessen, co-founder of Andreessen Horowitz, is sounding a warning bell too. He took to Twitter to criticize young firms for burning through their cash.

"When the market turns, and it will turn, we will find out who has been swimming without trunks on: many high burn rate co’s will VAPORIZE," he tweeted.

"Lots of people, big shiny office, high expense base = Fake ‘we’ve made it!’ feeling. Removes pressure to deliver real results. More people multiplies communication overhead exponentially, slows everything down. Company bogs down, becomes bad place to work."

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Two years ago, rumblings started to emerge from venture capital market participants that the market was getting frothy. And now the chorus is growing louder.
Komisar, stock market, valuations, venture capital
256
2014-04-27
Saturday, 27 September 2014 04:04 PM
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