EquityZen's Blog On Startups and Their Economics

The Week In Charts: 8.14.15

Shriram Bhashyam | August 14, 2015

(Source: Andreessen Horowitz, Capital IQ, Jay Ritter, NVCA via Benedict Evans)

What bubble? While funding has been ticking upwards since 2011, the capital flowing into tech is not at the levels of 1999-2000. However, while capital inflow is one indicator of an asset bubble, it's not the whole story. What about valuations? We've seen more or less a barbell effect in startup valuations, with seed and late stage valuations disproportionately increasing relative to Series A and Series B.

*   *   *   *   *

 (Source: The Daily Shot)

Macro. The big macro story this week was China's devaluation of its currency. This chart shows the devaluation efforts by China on Monday and Tuesday of this week, with the renmimbi down 4% for the week against the dollar. With the weakening of the Chinese markets--and more broadly the Chinese economy--the government decided to intervene by lowering the value of the renmimbi, making Chinese exports cheaper. A bit of history: until 2005, China maintained a tight peg to the US dollar (8.2 yuan per dollar), and since then has pegged its currency to a basket of currencies.

*   *   *   *   *
(Source: Tom Tunguz)

Revenue growth. Tom Tunguz highlights that US VC-backed startups grew at a median 85% compound annual growth rate  of revenues ("CAGR"), compared to 63% in 1998. Why? Acquisition channels have a much broader reach, purchasers are more open to buying from startups, private market investors are more willing to fuel growth with greater losses.

*   *   *   *   *

(Source: AJ Watson)

Due Diligence. Angel investors who spend 10 or more hours on diligence are 2.2X more likely to achieve returns of 5X or greater. Investments on which less than 10 hours were spent are more likely to be write-offs.

*   *   *   *   *

(Source: Business Insider)

a24z. Google announced a major corporate reorganization this week, with Larry Page and Sergey Brin ascending to the leadership of the new holding company, Alphabet. Former product head, and #2 to Page, Sundar Pichai will become the CEO of Google.  The core revenue-generating business will be housed in Google, while the venture arms and moonshot projects will be moved out of Google. The reorganization should help communication with Wall Street analysts, who have taken issue with spending on non-core projects. Better accountability and transparency around the core business will also allow Google to get some breathing room for its moonshot efforts.

*   *   *   *   *

(Source: EquityZen)

Payoff at exit. We took a look at what a typical venture-backed company looks like at IPO. The average company at IPO is 11 years old, with a market cap at IPO of $3.68 billion and average annual revenues of $394 million. As the chart above notes, the investors in the last private round tend to do pretty well, despite joining the game late. The average return from the last private round to the IPO price was 190%.

comments powered by Disqus

Back to blog homepage

Stay up to date

I've got equity

I'm an investor

Search the Blog

We've partnered with Wealthfront to provide our clients with sophisticated, low-cost investment management services.

Full terms: here


Recent Posts

Check out our Knowledge Center for more resources.