Mattermark just released their report on Q1 2015 venture activity in the US (download here). As you can see activity is up across the board but it is only late stage venture that has seen a massive jump. This picture is consistent with what I’ve been seeing and reading generally – if there is a bubble, and I now think there may well be, then it is confined to late stage investments. Activity is heady in the Seed through to Series C sections of the market but year-on-year growth rates in investment of 19-47% aren’t in bubble territory.
The interesting question is: where do we go from here?
I think we will either see a correction in late stage investment or the mania will spread down to the earlier stages. Or, more accurately, the late stage mania will continue it’s trickle down to the earlier stages until we either get a late stage correction or we are in a cross-stage bubble.
Corrections are typically stimulated by events – the last time we had a late stage bubble troubles at Groupon and Facebook’s poor share price performance immediately post-IPO took the heat out of the market. Following that logic, this time round I think the market will keep getting hotter until we see trouble at 2-3 of the leading unicorns – Uber ($40bn valuation), Snapchat ($15bn), SpaceX ($12bn), Pinterest ($11bn), Airbnb ($10bn), and Dropbox ($10bn).