“Pockets of exuberance” have popped up in private technology ventures, but most of today’s heavily funded startups warrant their valuations, a venture capitalist said on Thursday.
“For the most part, I see great companies growing fast and a fantastic time to invest,” said Venky Ganesan, managing director of Menlo Ventures, in a CNBC “Squawk Alley” interview.
Prominent investors, including Mark Cuban and Bill Gurley, have recently raised concerns about the number of companies shooting above the $1 billion valuation mark. Thirty-eight companies broke the threshold for the first time last year, a 150 percent increase from the year before, according to CB Insights.
The funding generated by startups could lead to “isolated incidences” of investors jumping in at higher valuations than they should, Ganesan said.
But revenue growth has shown that the companies deserve the funding in most cases, he contended. Ganesan noted that some of the companies have grown their revenue by 1,000 times in just a few years.
“That gives us a lot of confidence in what’s going on,” he said.
Ganesan added, though, that some companies are raising huge amounts of capital with “limited diligence.” He declined to point to specific areas where he saw over-exuberance.
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