De Masi: US VCs Overinflate Portfolio Holdings Compared to European Peers
Niccolo De Masi · 20VC: Niccolo De Masi on The Bursting Of The Tech Bubble and What It Takes To Be A Celebrity Partner with Glu Mobile · Mar 11, 2016 · at 2:47
Niccolo De Masi, CEO of Glu Mobile, contrasts US venture capital portfolio accounting and valuation practices with European and Asian approaches.
0:00 / 0:41exact quote · 41.9s
720p mp4 · rendered on demand · StarZero watermark
“In the US, VCs hold everything at these tremendously optimistic valuations as if everything's liquid and it's all getting sold at the highest comp they've found out there with the one sale in the sector, and every entrepreneur is convinced that they're sitting on, you know, hundreds of millions of dollars of, you know, value. And then they write down 90 to 99% of them. In sort of, you know, Europe and Asia, it's usually all the way around, typically, where, you know, sort of everyone is told that they are You know, not do anything terribly special, and, you know, you meet entrepreneurs who are on their, you know, B and C round, who own, you know, like, one percent of the business they founded, or something like that, and capital's taking the rest, and basically what the VCs do in Europe and Asia is they write up the one to five percent that are ever worth something.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Niccolo De Masi
De Masi: Tech unicorns face slow valuation deflation into 'zombie corns'
“I think those days are coming to the end, at least on this cycle. And I think you will see a slow deflation of unicorns becoming zombie corns in a lot of places. A lot of private paper mergers are going to happen.”
De Masi: Tech Unicorns Face Forced Consolidation and Declining Valuations
“When I look at the unicorns today, you know, you're gonna see forced consolidation, you're gonna see continued gas error being let out of valuations here, and people resist it Using clever capital structures, endless consolidation, and hope that they can hold …”
De Masi: Uber and Airbnb are burning massive cash defending network effects
“Other than Uber and Airbnb, I can't think of you with the same sort of network effects. And you can see how much money it's taking them to defend that. I mean, even the private company info that's leaked there is they're all hosing through cash.”
De Masi: Mobile gaming will consolidate into fewer companies within three years
“There's going to be huge consolidation in gaming, and I think that there will be, you know, fewer, bigger, better companies in the next two, three years with better profit margins. Ultimately, less global competition in mobile gaming than there is now.”
De Masi: Phasing out legacy business lines is more profitable than selling
“And it's usually, if not always, more profitable to run off your own legacy business than it is to try and sell it. Because if you sell it, you're gonna get a discount to what the cash, the free cash flow is you can generate.”