Silicon Valley’s Deal Machine Is Cranking: ‘I’ve Never Seen It This Frenzied’
Years into a boom for venture capital fueled by low interest rates and the prospect of a lucrative hit in tech, deal flow and valuations are reaching new peaks.
Among the biggest beneficiaries are the companies vying to become the next big social-media platform.
Investors are offering startups five times—or more—the amount of money they are asking, and deals that used to take months now sometimes close in days, according to venture capitalists, deal makers and founders. Startups are raising cash every few months rather than every couple of years, and valuations are soaring with each new check, these people say…
Many of these new social apps use video, audio and text features to connect strangers and friends, fans and celebrities, including the chat service Discord Inc. and Stationhead Inc., where users can effectively host their own radio show. Others such as Patreon Inc. and Clubhouse are built on an industry of self-described creators seeking new platforms where they can self-publish content and make money.
Clubhouse has been center stage. Three months ago, the audio-chat app was celebrating a new funding round in which venture capitalists valued it at $1 billion, 10 months after it launched. Today, it is valued at $4 billion, according to people familiar with the matter…
A day after Clubhouse’s funding announcement, Facebook Chief Executive Mark Zuckerberg announced a suite of new audio products the company says it will build out in the coming months. Mr. Zuckerberg discussed his company’s foray into audio on Discord, which last month announced its own Clubhouse-like live-audio feature.
Also on Monday, Reddit Inc., a social-media platform known for its message boards, unveiled a live-audio feature that appears similar to the Clubhouse app. Both Discord and Reddit have doubled their valuations in the past few months. Twitter Inc. is rolling out its own live-audio feature, called Spaces, after investing in startup Seventh Ave, an audio-social app for the Black community set to launch publicly Thursday.
The land grab highlights how the simplicity of live audio makes for a weak defense against competitors, some of which have built and launched their own audio products in weeks, said investors and tech executives.
“Everyone is fighting for attention right now,” said Bobby Gay, co-founder of Seventh Ave…
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