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IPO Slowdown Leads NEA to Sell $1B Worth of Startup Stakes (wsj.com)
61 points by prostoalex 8 months ago | hide | past | web | favorite | 28 comments

Interesting contrast to the world of biotech VC where the IPO and M&A environment has been strong since 2013. More IPOs and big M&A deals than tech despite only getting 1/5 of funding

Seems this startup bull cycle has been driven by M&A where the late 1990s was driven by retail investors. However the tech acquirers seemed to have slowed down since 2010-2014 while biotech acquirers have been doing a steady number of billion dollar plus buyouts

Biotech is more traditional.. VCs assume less risk overall even though materials may be more expensive than a straight tech company. In the former you get something that works and the FDA approves in the latter you are going for users.. in some sense gaining users depends on vanity like total funding which drives press etc... This might be a weak hypothesis.. dunno. Other companies in the space that are not retail consumer oriented with high valuations seem to suffer.

Interestingly China is simultaneously seeing problems in its tech IPO listings. The private equity market has massively overvalued the companies and now they can't properly exit by IPO at the formerly anticipated valuations.

"Two-thirds of the 21 tech IPOs in the past year are below their issue price, with shares down an average of about 20 percent through Friday. Leading the wipe out are online financing platforms Qudian Inc. and PPDai Group Inc., which plummeted 55 percent and 48 percent respectively, while search engine Sogou Inc. has tanked 27 percent."

"The extraordinary surge in private valuations that has seen China sprout 164 companies worth at least $1 billion now presents a challenge in public markets."


Interest rates. The unprecedented, ~10 year sugar high of near-zero (or in some cases, below zero) interest rates is finally ending, and there's a massive deflation of non-monetary assets underway, across the global economy.

If you only follow the bay area tech industry, you'd be excused for believing that this bubble isn't structural -- that it's just the inevitable consequence of the maturing role of the internet and technology in our daily lives. But assets everywhere are inflated in value. From Tesla shares to vacation homes to startup stock to blockchain tulips, the global pool of money has been desperately chasing speculative returns for years, and that process is finally beginning to unwind.

I also think this has an impact on inflated asset/stock prices:

The total number of U.S. exchange-listed companies peaked near 8,800 in 1997 and has since sunk to 4,900 as of year-end 2012, according to data furnished by Strategas Group.


Sure. But. Where do you put the money? Gold? Silver? Or bank accounts? Macys? Maybe oil is the future?

Short - mid term bonds aren't very correlated with increasing interest rates. I normally loathe gold/silver but commodities tend to do well in a rising rate environment.

The good thing about rising interest rates is that you have a lot of "safe" options -- bonds, CDs, savings accounts, etc. Rates are rising across the board.

Stocks are in for a rough ride, but if you're into a diversified market for the long term, probably as good as ever.


> Issue caused by centralized monetary policy.

> Suggests decentralized alternative.

> Gets downvoted into oblivion

Look crypto isn't perfect, and it's highly volatile, so maybe putting all your life savings into bitcoin isn't the best idea, but knee jerk reactions like this don't help with substantive discussion.

There have been dozens of substantive debates on Hacker News in recent weeks, regarding Bitcoin. And the smart people say it’s a scam. And we can’t have this debate in every single thread. At this point, it seems reasonable to simply downvote the people who are saying unreasonable things.

bitcoin seems stable at $8k.. why is that?


Anyone have an idea what happens to home prices as rates rise. Prices going down is a simple answer but with people leveraged to the hilt to buy expensive single family homes, it seems more complicated. Underwater mortgages get complicated quickly as we saw in 2008.

My answer is always this: if you live in it, it isn't an investment. Stop worrying about price appreciation, and focus on cost/benefit.

It doesn't matter how underwater your mortgage is unless you need to sell out of it. If you don't think you're going to live somewhere for 10+ years, or if it's more expensive to buy then rent on your preferred timescale, then don't get a mortgage.

We’re missing 3 ingredients from 2008: adjustable-rate mortgages, high risk mortgages (0 down, interest-only, no doc, etc.), and unemployment.

Most mortgages written in the last 5 years - that is, the ones which might be underwater - are fixed rate and have meaningful down payments.

Even if unemployment rises[1], as long as homeowners still have the same monthly payments, and have a meaningful down payment, they’d stay in their homes as long as possible.

In cities where appreciation has been strong, I think the likely outcome is a small (5-15%) decline over a few years, then flat appreciation (ie, a decline in real dollars) for a few more years, and relatively few sales because most folks would stay rather than sell while underwater. This may decrease geographic mobility. Basically, when rates rise closer to historical norms, 5 years of appreciation is already priced in and anyone who doesn’t need to move doesn’t move.

As with most assets, don’t put yourself in a position where you absolutely need to sell.

[1] If mortgage rates go up significantly, employment is still probably relatively low or the Federal Reserve would loosen its monetary policy and that would affect the mortgage market. I’m ignoring the wildcard case where the Fed’s monetary policy moves no longer have any impact.

Markets will get sticky as people are reluctant to sell for a loss and fewer people can buy as interest rates go up. In markets like LA, NY, SF the high end will still probably be propped up by foreign "investors".

What will happen? Defaults, prices drop, some investors come bottom fishing for deals, the cycle repeats once again.

It's not inflated... just no buyers at the valuation they want. They can sell at a lower price.. Same as a developer building a house. The might list at $500k but they could still sell at $400k and not lose money.

I agree but I do believe cash generating assets (or cash flow generating) will be hit less hard.

Overvaluation of tech companies by the private markets could be understood as part of the same mania that was so pronounced in the case of Bitcoin -- namely, that everyone believes that tech (crypto) is the golden path.

China has another weird problem in that nobody understands what is going on there. Government interference mixes it up.

Interesting - moving from one fund of theirs to another. I'm sure they'll have to do a lot of careful work on pricing the transfer.

they actually will have to, because they're going to take outside money to fund the acquiring entity. they have an obligation to those shareholders to price the shares properly as well. i assume the partner who is running the second fund was removed from the first fund in order to resolve that conflict of interest.

They have to not screw the new investors in the new fund while providing a fair return for the investors in the old fund. This is seems like there could be serious concerns about a conflict of interest depending on who the investors are. I'm curious to know if there's much overlap in the investor pool.

I'm pretty sure the KPMG's and PWC's of the world make a lot of money sorting through things like this. :-)

Paywalled. Here is a readable link: https://outline.com/sbXxJr

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