Bahat: Venture capital's greater fool dynamic will not survive a market downturn
Roy Bahat · 20VC Exclusive: Roy Bahat on Bloomberg Beta's New Fund, The Truth About Valuation That Very Few VCs Will Tell You & Why Founders of Venture Backed Startups Make The Best Angels · Oct 18, 2019 · at 25:17
Roy Bahat, head of Bloomberg Beta, critiques the post-2008 venture capital market dynamics and late-stage valuation markups.
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“We do have this greater fool dynamic happening in our industry. And one of the challenges is if your strategy, nobody's explicit strategy is this, but if your actions reveal that actually your approach is making money on the greater fool, which is to say the later stage investor marking you up at a higher price, maybe someday buying you out. There are a lot of fools out there and their funds are in size pretty great. And so you can make, that is a viable financial strategy, at least at the time being, and probably will be for a few years. It's not who we are as people and as a fund. And I don't think it's a strategy that survives a market that is less strong than the incredibly strong market we've had since 2008 in startups and VC”
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