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VC Dealmaking Has Reached a Crescendo, But This Isn’t 1999 All Over Again


By Matt Cohen
Cries are starting to abound that VC investments have reached a 1999-esque fever pitch, and the bottom is due to fall out soon. 
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The pace of dealmaking is frenzied: The 61 percent year-over-year increase in funding for the first half of 2021 is a staggering leap, and the 136 new unicorns in the second quarter of this year are rightly raising eyebrows since the entirety of 2020 produced a mere 128. 
Matt Cohen, founder and managing partner at Ripple Ventures
It’s reasonable to expect some form of correction, but anything parallel to the 2000 crash is most likely overstated. 
Here’s why.
First, we’ve become conditioned to these cycles in venture capital. The recovery from 2000 was slow and painful, but if we look back to 2008 and its subsequent recovery years, VCs increasingly seized the correction as a buying opportunity and nurtured startups like Slack, Airbnb and Dropbox. 
The slowdown in investment lasted just three years and was far less marked than after the turn of the millennium, demonstrating much stronger conviction among VCs in the long-term potential of tech startup investments.

Next, investors are desperate for returns. A major component of the current pace of dealmaking in venture is simply a matter of getting massive inflows of LP money out the door. Other investments have become far less enticing as returns have become more muted, so even when some of these investments t …

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