We live in a remarkably disruptive time. New technologies are changing the way almost every industry operates. There’s a lot of opportunity for innovative companies to make a big impact.
But we also live in a very unique time when it comes to finance and monetary policy. Interest rates have never been anywhere close to this low for this long. Money-savers are punished while those who take on debt — and risk — are rewarded.
The combination of current financial conditions and disruptive technologies has created an intoxicating environment for investors. Everyone wants to invest in the big growth stories (Tesla, Snowflake, Airbnb, Uber, etc). And that’s led to crazy levels of hype during initial public offerings that drive stock prices sky high.
The result is many company valuations are “bubbly.” And the way I see it, the best way to avoid paying bubbly valuations is to invest earlier.
As you all probably know, I think the best way to invest early is through private investments such as those offered on sites like AngelList. Yes, the valuations of early-stage startups are higher than they were five years ago — but not remarkably so. And certainly not comparable to how high valuations have become in public markets.
So while everyone else is chasing the same few big-growth stories, I’m looking for unknown early-stage startups with big potential. I strongly believe this strategy will prove superior over the next 5-to-10 years. My advice is to keep looking for reasonably priced startups — outside of trendy market spaces — and give the public markets time to sort themselves out.