Gurley says late-stage investors force-feed capital to companies based on power law beliefs in unprecedented ways.
“It's it's it's just worse as it's ever been, where because you have these monolithic late stage players who believe in power laws, believe in network effects,”
Gurley asks what percentage of 1,400 pre-LLM private unicorns could raise up rounds today.
“What percentage of those could raise an up round right now? Yeah. What is the number?”
Gurley says complex cap tables with multiple constituencies cause investors to opt out of unicorn financings entirely.
“a lot of people just say they opt out and say no this is too hard, I'm not going to go in there and negotiate with five different constituencies on how to do this.”
Gurley argues current risk bubble differs from 1999 because investors now put hundreds of millions into four-year-old private companies.
“But you didn't have a situation where people were putting $102,103 $104,109 $1,001,000,000,000 dollars into a private company who might only be four years old. These companies just haven't had the time to mature.”