The Great VC Bubble Debate of 2021

Thoughts from the Frontier
4 min readNov 9, 2021


I recently ended up in a discussion with one of our very thoughtful members, Eduardo, (at Massive we don’t have LPs, our co-investors are Members) about recent data on the size and shape of venture rounds in the last year. While the topic isn’t new and plenty of ink has been spilled, I was encouraged to post my thinking on the topic, so here’s the conversation (with some minor cleanup).

From Member:

Hey David and Ari,

This is the brand new data from CB Insights on the global VC market. Shows a 136% increases YoY Q3 comparison in number of mega rounds (100M+) and a 105% increase YoY Q3. This is $81B more in venture funding!

Are we in a VC bubble? It looks like it. When will the bubble pop? Who knows.

My reply:

Aah — the great debate. Here’s my 02c on it.

Are we in a bubble? All of the data says yes. The charts say yes. The round sizes, speed, valuations and lack of discipline amongst many investors say yes.

However, we also see fundamental changes happening in the capital markets, crypto markets, and information arbitrage game that are changing the ground underneath the market. Wealth expansion, demand even at retail levels for huge performance due to CPI / inflation explosion, etc. Resetting of expectations for what meaningful performance looks like — where 10–15% a year at moderate risk used to be fantastic perf. Now its 5–10X…Risk ON and “over the skis” in name of perf is where we are. Big money is placing big, big bets in order to generate the multiples the asset class is looking for.

Howard Lindzon has a thesis around “tiny bubbles” that resonates with me. With so much demand and dry powder out there, any downturn is a chance to make more money vs pull out and run away. This is why the bubbles and the drops are more violent and happening for shorter duration perhaps. Will the tiny bubbles continue in the face of macro changes (inflation, interest rate movement, etc)?

All we can do is 1) stay disciplined 2) collectively retain dry powder (read: cash/balance sheet/investment reserves) to support PortCos that can survive a correction and do well and 3) be prepared with help, guidance and strategy when it does happen.

The worst thing an investor can do in a down market is run away IMO. Make different decisions, sure — but not continuing to invest and/or support their investments is bad. Some of the best performing venture funds and companies grow out of the tough markets because you get the price discipline, operational fitness and conservative growth views all baked in (free) vs having manage to it or create it during turmoil.

After years of growth, COVID should have triggered what would be a current 3–5 year bear market. Instead it was a short, news driven cycle and there was so much dry powder the smart money BTFD (Buy the F**king Dip) and did great. Huge wealth expansion during a pandemic during record unemployment. The market is drunk on fed money. Will this be a snowstorm or a nuclear winter when it* stops?

The good news is that Massive’s structure has created a great way for us to take advantage of unpredictable markets. As you know our SPV strategy allows us to evaluate the risk profile of each investment on its own. We are not constrained by traditional VC fund rules. We have a lot of flexibility and if anything a bear market will help amplify signal around the companies that have created long-term enterprise value that align with our strategy. So while we know it will be stressful and probably hard to read from a macro standpoint, we can keep our heads and keep doing our thing.

*”It” being the infinite quantitative easing we have been living through. Between the Fed stimulus checks, the Fed bond buyback program (remember the Fed has been buying $120B of bonds A MONTH), and other Fed “printing” programs, we would expect interest rates to move up. Inflation is screaming upward costing everyone more for the basics, and yet people are quitting their jobs, spending their profits and assuming this will go on. We’ve been artificially tamping down interest rates here to drive more borrowing and spending. There is a fair argument that we are now in a different era and deficit spending and traditional macroeconomics are changing. These policies are happening in the EU, and for the Bank of England also. As we’ve seen with the global supply chain and COVID itself, there will be contagion and it doesn’t really matter where it starts. Also, I am not an economist, just have been in the trenches through these cycles so take my POV with that context.

Note: The timing of this conversation was great because I’d already started outlining a different post on my experiences being an operator and founder through two different major cycles. I was the head of Ops for a global CDN called Volera in 2001 (dot-com crash) and was the Founder and CEO of Filtrbox during the 2008 financial crisis. As we’ve gotten deeper into this frothy bull market all of this has been bouncing around in my head and as as you can imagine, I’ve got a few thoughts on the subject. This post is still WIP but will share it soon. Thanks for reading this far!



Thoughts from the Frontier

Co-Founder and MD @, Partner @ The Fund Rockies. Prev: Techstars VC, Co-Founder @ Filtrbox (sold to Jive) Co-Founder @ (sold to Novell).