The uptick comes after increasingly heated debate over the last two years about whether start-ups were in a bubble that was about to pop, Tyler Willis, entrepreneur and angel investor, told CNBC.
“Growth companies specifically have historically been able to raise lots of money at high valuations, and investors were willing to pay for growth even if the company didn’t know how they wanted to make money yet,” Willis said. “That’s over. It ended summer of last year, I would say.”
But rather than “pulling the rug out” like in 2001 or 2008, there was a slow contraction or “return to rationality” as more fair-weather investors, like corporations and hedge funds, gradually left the start-up market in pursuit of less risky ventures. As a result, investors can now get a discount when investing in companies relative to last year, Willis said.
That’s a good thing because as if venture capitalists hit the right level of confidence, more innovation is created for all of us, according to Willis.