The Startup Valuation Madness Continues

The Startup Valuation Madness Continues
By Adam Sharp
Date August 17, 2021

I recently went down to Miami for the Mining Disrupt conference. I met some very interesting startup founders building promising crypto companies.

But I didn’t invest in any of them. The reason is simple: they were too expensive. For example, there was one pre-revenue startup in the crypto payment space. The founder was very charismatic, technically savvy, super smart and had very cool ideas. But the valuation was $15 million. As much as I liked the idea and the founder, I couldn’t pull the trigger.

I continue to view most startup deals as overvalued. The valuations simply don’t make sense. Pre-revenue, seed-stage companies are raising at $15 million to $20 million valuations. And companies with a few million in revenue are raising at more than $100 million. It’s crazy out there.

And I’m not the only one who feels this way. This type of tweet pops up on Twitter all the time.

In fact, things are so crazy that when a company has a realistic valuation, people are wondering if they should become suspicious.

So I continue to watch, wait and invest mostly in other things for now. Occasionally I will come across a startup deal at a fair price — and if I like it, I’ll invest. But for the most part I’m holding back.

In the short term, I may look foolish for not investing in some of these companies. But over the long run, I’m confident that it’s a good decision. It’s very difficult to make good money on early stage investments when you overpay on valuations. 

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