Paul Graham wrote an email to Y Combinator’s portfolio companies about what Facebook’s underwhelming IPO meant for them.
“What I do worry about is (a) it may be harder to raise money at all, regardless of price and (b) that companies that previously raised money at high valuations will now face “down rounds,” which can be damaging,” wrote Graham.
We asked Sean Parker, the Facebook billionaire and angel investor with a new startup, Airtime, what he thought.
“I don’t think Facebook’s IPO is going to have any impact on startups, not short-term. Venture capital wealth is so overfunded, there’s so much money chasing so few ideas that it’s not an issue. It won’t be an issue for a while….But if [the scene] does get a little less frothy, it’d be a good thing.
“The idea that this one momentary shock to the market would have a long-term impact—I think the only possible effect it can have would be good. This is the most competitive environment for engineers, for executives, for peers, for entrepreneurs, and you don’t get a concentration of talent.
“They had a concentration of talent at PayPal. That’s where Reid Hoffman, Peter Thiel, Jeremy Stoppelman and Max Levchin all came from. Facebook managed to achieve a concentration of talent. We’ve also done it at Airtime, but it was very hard.”