I just saw the above chart in a post about exponential organisations from Salim Ismail of the Singularity University. It seems to me there are two obvious explanations for the dramatic reduction in the time it takes for companies to achive $1bn valuations:
- The pace of change is increasing allowing new companies to develop and mature faster
- We are in a bubble – at least for late stage companies
The fact that the trend has been going for some time – Google was founded in 1998 and Tesla and Facebook in 2003 and 2004 respectively – suggests that the bubble explanation can’t be the whole story. If we are in a bubble it hasn’t been going for more than a couple of years. So the primary explanation has to be the increasing rate of change.
That said, I think that froth in the late stage financing market has contributed in the last couple of years.