Several venture capital firms have logged their greatest returns in two decades since the dot-com boom in the late ’90s, the WSJ reported.
- The median tech IPO price-to-sales ratio or the market capitalization divided by the past year’s top line was at 23 in 2020, the highest since the dot-com bubble popped.
- The surge in profits is being fueled by investor interest in fast-expanding companies, particularly newly-listed tech firms.
- Silicon Valley Bank Managing Partner Julia Feldman said there is a flight to growth and innovation, but she is cautious over valuations and its implications on future investments.
- The price-to-sales ratio is at 20 so far this year, but has never cracked 12 between 2002 and 2019, according to University of Florida’s business school professor Jay Ritter.
- Some 21 companies valued at above $5 billion after the first trading day have gone public this year, on track to overtake the 42 in all of 2000.
- Companies have also taken time to grow into large organizations before listing publicly, adding to the surge in returns.