Several private, venture-backed companies have achieved rapid and extreme valuation mark-ups. This has obviously been going on for some time now in Silicon Valley and the private tech sector, but the magnitude and frequency of the recent write-ups I’ve seen has given me pause. I’ve been trying to piece together the ingredients that are creating this environment, and in my opinion it comes down to the following: scarcity, momentum, FOMO, and gains.
(1) Scarcity as a Driver
Last week I was fortunate to attend The Big Talk Summit at the Computer History Museum in Mountain View. This was the first time The Big Talk was hosted in Silicon Valley, and this particular event brought together a cross-disciplinary group of leading entrepreneurs, developers, and thought leaders to explore the convergence of fast-moving technologies in the reinvention and future of our society.
Box, the closely-watched cloud company, had a successful IPO on Friday, pricing its offering above the filing range at $14, raising approximately $170M, and seeing its shares pop over 60% on its first day of trading, closing at $23.23 per share. A huge congratulations to lead founder and CEO Aaron Levie (@Levie) and Series A lead investor Josh Stein (@dfjjosh) of DFJ.
Lending Club debuted on the NYSE yesterday. Although GGV was not a venture investor in the company, I’ve been looking forward to this event for some time. I believe the company is well positioned for the future and has done a great job preparing to be a public company. Here are few of the lessons I believe one can draw from the Lending Club IPO recipe: