Gurley says he is seeing the most risk seeking venture capital behavior he has ever seen in his entire life.
“You would have a hard time convincing me that risk capital is in shortage in America right now. I'm seeing the most risk seeking venture capital behavior I've ever seen in my entire life.”
Gurley explains tech valuations depend on terminal value, so existential concerns collapse price-to-earnings multiples dramatically.
“for most of these high-tech companies, the next five years cash flow are a fraction of their actual market cap, which means all the values in the terminal value.”
Gurley says IPO bankers hand-pick price and allocations, creating expected pops as one-day giveaways to clients.
“And for the past twenty five, thirty years, you have these pops that have become expected, I would say. And it's a one day giveaway to their clients.”