Venture capital investments as a whole are not in a bubble, said Ben Horowitz, co-founder and partner at Andreessen Horowitz, in a one-on-one conversation with Kara Swisher, co-CEO at Revere Digital and co-executive editor at Re/code, at the Milken Institute Global Conference on Tuesday.
Mr. Horowitz said opportunities are larger than ever today. He cited Slack as an example of one of his investments, which he believes could replace e-mail for organizations. “People really want to believe (VC) is a bubble.” If people think it's a bubble, it's probably not, he added.
Mr. Horowitz also commented on the growing importance the private markets are playing in the development of new companies raising capital. “The private markets have taken over a lot of the functions of the public market,” he said. As a result of a huge set of changes in the public markets between 1995 and now, being a public company is less attractive.
This has caused firms such as Fidelity Investments and T. Rowe Price that used to invest in public companies to now invest in private markets.
Investors without much experience in private markets are investing “as if they are public companies.”
“We went from overregulation” that was overly burdensome for companies to something that is “completely unregulated.” The new pre-IPO process is “scary” because of a lack of legally required disclosure and underwriter due diligence.