For years, the venture capital industry has been a place where the huge rewards of technology investments have often been overshadowed by much more unsuccessful offers. But as the Wall Street Journal reported on Wednesday April 28, the past few months have seen “an unusually high number” of venture capitalists reap multibillion dollar profits, “preparing many companies for their best returns. since the dot-com boom of the late 90s. “
The Journal’s story uses the example of Sutter Hill Ventures, which invested less than $ 190 million in cloud computing company Snowflake Inc. and recouped nearly $ 12 billion, “one of the largest investments. profitable never achieved in venture capital ”.
Venture capital firms typically hold a large portion of their investments until the companies go public, then sell or transfer shares to investors after the post-listing lock-up period has expired. Others keep their investments in place in the hope that the stock will increase. Many funds have yet to sell or move their shares. If they did, says the Journal, “the gains would eclipse many of the best venture capital investments ever made in US companies in global dollars, including Accel’s more than $ 5 billion profit on an initial investment. $ 15 million from Facebook Inc. and $ 7 from Kleiner Perkins. billion in profits on a $ 3 million investment in Juniper Networks Inc. in the dot-com boom. “
What is fueling this new boom? Interest in fast-growing companies, especially newly listed tech companies, has been fueled by low interest rates, government stimulus payments, and the arrival of new hobbyist investors in the market.
As PYMNTS reported last month, investments in private startups in the first two months of the year amounted to more than $ 460 billion, nearly 40% above the peak seen in this industry. three years earlier. This push was led by larger companies like Coatue Management and Tiger Global Management. Tiger, which oversees $ 50 billion in assets, nearly doubled the pace of its investments between 2020 and 2021.