Just weeks ago, Lyft, the popular ride-sharing startup that occupies 33% of its respective market, went live on the Nasdaq. Shares of Lyft, denoted by the rather fitting ticker symbol LYFT, have since fallen dramatically (30%), but there have been entities making a copious amount of money throughout all this. These entities, if you haven’t guessed, are venture capital firms.
In a private rounds years ago, venture capital firms, like the legendary Andreessen Horowitz (a16z) and Peter Thiel’s Founder Fund, secured shares in Lyft for pennies on the dollar. a16z, for instance, bought 6% of Lyft in 2012 for $4.25 a share. These same shares now sell for $57 on the open market, thus netting a16z over $1 billion. Of course, these investors gave money to Lyft knowing that there was a considerable risk, but millions, if not billions were made with this IPO.
The @A16Z Fund III , $900M , 2012 vintage looks pretty good own 6% of $LYFT, should generate $1.8B in liquidity based on $30B valuation, a 2x on the fund also own over 5% of Pinterest, which should generate $500M+ Based on those two deals, will likely hit 3x DPI — Shai (@shaig) March 28, 2019
The growth of their bank accounts won’t be slowing any time soon.
Earlier this month, Beyond Meat, the ‘meat’ company that deals solely in plant-based substitutes, unveiled plans to raise capital through an IPO, as did Zoom, Pinterest, Pager Duty. And Uber, Postmates, Slack, and Airbnb are also expected to release solid plans to go live on American stock markets by 2019’s end.
If these IPOs perform as analysts expect, the listing of the aforementioned startups, dubbed by some as the “IPO Frenzy,” will likely be the biggest iteration of private wealth creation ever. Venture capital firms and wealthy financiers will be able to dump their shares en-masse, receiving liquid capital for an illiquid asset they held on to for years.
This may sound all well and good, but in the eyes of some, there’s a glaring issue here. As Ben Horowitz, the co-founder of a16z, surprisingly said, the “public market investor doesn’t get access to a lot of the growth, and that just creates wealth inequality.” That’s the thing, by the time mom and pop investors get access to own stake in some of the Bay Area’s biggest names, all the money has already been made.
There’s a whole different story with Bitcoin though.
From a holistic perspective, Bitcoin is the first asset of its kind… ever. It is a decentralized, non-sovereign, deflationary, and uncensorable form of money confined by the rules of a computer protocol, one which was made by a pseudonymous developer. What’s more important in the context of this conversation, however, is that Bitcoin is the first consumer-available asset that has netted its early adopters over 100,000% (1,000x). In other words, BTC could be seen as a medium for the creation of wealth equality, not inequality.
You didn’t have to be a long-standing, recognized Silicon Valley entrepreneur, with a large amount of cash in your bank account to boot, to purchase BTC during its earliest days. All you needed to be was a savvy consumer with an eye for obscure yet revolutionary trends, the mental fortitude not to sell during downturns, and the ability to store coins safely.
As seen below in the chart compiled by James Todaro, the managing partner of Blocktown Capital, Bitcoin is one of the highest netting modern assets. But Bitcoin is the only asset that gave those with no accreditation, the majority of investors in America, the opportunity to see a parabolic growth in their wealth.
The public was only allowed to invest in Facebook, Uber, Lyft, Twitter, etc after the investors from Series A rounds made between 50,000 to 200,000%. It didn't matter how smart you were or if you saw this wave coming. No accreditation, no opportunity. pic.twitter.com/YrNy8yaVd9 — James Todaro (@JamesTodaroMD) April 28, 2019
Bitcoin appreciating tremendously over the past decade doesn’t null its opportunity to rally parabolically again, however. In fact, what’s ironic is that the money made off the aforementioned trend of Silicon Valley IPOs is likely to be a catalyst for said future growth. As Barry Silbert, the head of Digital Currency Group, noted in late-march, this newfound supply of cash from IPOs, will largely find its way into the hands of cryptocurrency and blockchain names.