A palpable feeling that the party is over in the Bay these days—not that there’s no more VC money (there’s more than ever) but that there’s nothing to build except dull B2B SaaS apps.
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I'm surprised that financial oversupply is a risk factor -- why is that?
It takes time to invest, and finding the same return rate for a larger pile of $ over the same horizon takes longer. So larger deals are oversubscribed and smaller ones get starved. Think “smart money”. If a single VC is deploying 1B instead of 100mm, each $ is 1/10th as smart
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That's a risk factor for individual startups and VCs, but the smaller ROI from pumping ecosystems w/more money doesn't imply that larger ecosystems are worse. Companies w/dumb money die, but ultimately generated consumption, grew the local economy, etc. The effect is ambiguous.
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companies that bid up office space and talent, and then spend their cash on cocktails and offsites—these mostly produce malinvestment.
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Doesn't the evidence show that smartness of investment isn't all that important, just quantity of bets made? Intuition says that more capital means: - less overhead/dollar - more risk-tolerance --> more returns
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