Blogs -Silicon Valley is Losing its Entrepreneurial Spirit

Silicon Valley is Losing its Entrepreneurial Spirit


January 09, 2020

author

Beth Kindig

Lead Tech Analyst

This past week, I wrote about how Silicon Valley is losing some of its entrepreneurial spirit as venture capitalists shifted their attention to later stage deals with higher valuations. In the analysis, I pointed out that 2019 was the most lucrative year for exits in more than a decade, with $200 billion in exits generated from venture-backed IPOs.

For context, I went back to the golden years of Silicon Valley – 2006 to 2014. During this period, venture capital that was invested in deals below $5 million grew by 290%.

However, things changed in 2015, when early stage deals from below $1 million to under $100 million began to decline at a rate of 20% to 36% per year. Early stage software companies suffered most from the reallocation during this period, while early stage deals declined from 388 in 2018 to around 279 in 2019.

So how did this happen?

I identified two culprits behind the trend – Silicon Valley’s declining entrepreneurial culture and the increasing attractiveness of late stage investments.

Startup pitches and dynamic innovation have been replaced by a relatively closed circle of investors who are only targeting high valuations. In fact, we are seeing an aggregate all-time high for 180 private companies with $1 billion-plus valuations, and they have undermined the attractiveness of seed and Series A round companies.

Moreover, the IPO window is shifting from a range of six to eight years to ten to twelve years, which drove several startups to go public at valuations of over $10 billion this year. Consequently, this has made late stage investments more attractive due to their longer duration and higher valuations. The downside is that it has suppressed early stage investments (defined as deals below $5 million), which only further hampered Silicon Valley’s entrepreneurial culture.

Exciting early stage entrepreneurial stories have become rarer over the past few years, and many of the start-up tech events that I go to have either a noticeable lull or have moved overseas. The sad reality is that Silicon Valley’s entrepreneurial culture has faded, and entrepreneurs have a better chance at attracting capital from strangers on Kickstarter than from Silicon Valley angels and VCs.

Read the full article in MarketWatch here.

Image by Patrick Nouhailler

head bg

More To Explore

Newsletter

Beth Kindig, Lead Tech Analyst at I/O Fund, interviewed on Fox Business discussing Nvidia’s earnings beat and solid guidance.

AI Stocks in 2025: What Every Investor Should Know

The market evolves quickly, and nowhere is that more apparent than in AI stocks, which continue to lead in both innovation and returns. At the I/O Fund, our deep coverage of AI stocks, combined with a

July 03, 2025
Modern data center building next to a nuclear power plant cooling tower.

Nuclear Power Emerging as a Clean AI Data Center Energy Source

Data center power demand is forecast to surge over the next decade, with some estimates seeing demand increasing 3x by 2030. Inference is expected to be a primary driver with power demand growth proje

June 27, 2025
Nvidia vs. AMD CEOs in AI GPU race, spotlighting AI inference competition.

AMD vs Nvidia: The AI Stock That Could Win by 2028

Last week, AMD offered more details on the release of their groundbreaking GPUs with little fanfare in the markets – which is par for the course as AMD has a history of being forgotten about until the

June 20, 2025
AI chip powering data growth with green upward graph, symbolizing semiconductor and AI market expansion

This AI Stock is Set to Surge from Inference Demand

Up until now, the AI conversation has been dominated by training and compute, yet inference is showing signs of exploding growth. Microsoft and Google recently highlighted 5x to 9x YoY growth in AI to

June 13, 2025
Taiwan Semiconductor drives AI growth amid geopolitical risk

Taiwan Semiconductor Stock: AI Growth Amid Geopolitical Risk 

Despite their leadership, AI stocks like Taiwan Semiconductor and Nvidia are flat year-to-date and trading at similar levels as June 2024. Clearly, the AI trade is not as straightforward as it might s

June 06, 2025
Man walks on a broken bridge with a stock chart overlay, symbolizing market challenges

Historic Market Uncertainty Meets $7 Trillion Debt Wall: What Comes Next for the S&P 500

We are seeing mounting evidence that this bounce may be the start of a new push to all-time highs, such as improved breadth, better than expected earnings plus the size of this bounce. However, one ca

May 27, 2025
a baseball stadium with Nvidia billboard

Nvidia Stock Faces a Choppy Q2, But Tailwinds Build for H2 Acceleration

Nvidia’s streak of blockbuster earnings has turned investor expectations into a high-stakes game— anything short of perfection risks disappointment. As the company gears up to report fiscal Q1 results

May 23, 2025
Microsoft stock up as Azure tops AWS, Google Cloud in Q3 2025

Microsoft Stock Surges After Q3 2025 Earnings: What Separates Azure from AWS, Google Cloud

Microsoft stock jumped after Q3 2025 earnings as Azure emerged as the only major cloud platform to accelerate growth this quarter — a rare feat amid macro pressures. Azure’s 35% constant currency grow

May 16, 2025
Bitcoin price chart signaling potential top despite favorable crypto news

Why Bitcoin’s Bull Run May Be Nearing a Top Despite Pro-Crypto Tailwinds

Since calling the Bitcoin bottom near $16,000 in late 2022, the I/O Fund has maintained a disciplined, contrarian approach — issuing 13 buy alerts before Bitcoin surged above $100,000. Now, signs sugg

May 09, 2025
S&P 500 hits key 2025 target as bond market and consumer trends signal rising volatility and shifting stock-bond correlation.

2025 Market Outlook: Why Stocks and Bonds Are Signaling More Volatility

As the S&P 500 reaches a key bounce target, troubling signs in bonds and consumer behavior suggest this market rally may be on thin ice. I/O Fund’s Knox Ridley explains why volatility may intensify an

May 02, 2025
newsletter

Sign up for Analysis on
the Best Tech Stocks

https://bethtechnology.cdn.prismic.io/bethtechnology/e0a8f1ff-95b9-432c-a819-369b491ce051_Logo_Final_Transparent_IOFUND.svg
The I/O Fund specializes in tech growth stocks and offers in-depth research for Premium Members. Investors get access to a transparent portfolio, a forum, webinars, and real-time trade notifications. Sign up for Premium.

We are on social networks


Copyright © 2010 - 2025