This Chart Tells You Why VCs Are Screaming Over Startups Burning Cash
In the past two days, two prominent venture capitalists warned that startups are burning through too much cash - just like startups did during the dotcom bubble.
There may be a reason for that.
Startup investors are flooding the market with cash at a historical rate.
Venture capital investment into seed stage, early stage, and expansion stage companies spiked 55% quarter-over-quarter in the second quarter of 2014.
It was the largest quarter-over-quarter growth in VC funding since the fourth quarter of 1999, when the dotcom bubble really got going. That quarter, investment grew 66% over the prior quarter and 298% over the same period the year prior.
One big difference between 1999 and now: Most of Q2 2014's growth came in the expansion stage. The 1999 spike was across all three stages of VC investment.
Here's a chart isolating expansion stage investment:
PWC Money Tree, Data: Thomson Reuters
Here's a chart excluding expansion stage investment:
PWC Money Tree, Data: Thomson Reuters
It's possible two taxi companies are responsible for most of the spike: Uber, which raised $1.4 billion in June, and Lyft, which raised $250 million in April.
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