TL;DR "The total amount of money that startups have raised is still down from a year earlier, albeit by less than recent weeks. There were a few outsized deals last summer that caused this sub-index to spike. More worrying is the slump in the number of companies that get acquired or file for initial public offerings."
So it's a concentration of investment in likely winners. Unless you have some unique edge (i.e. you're B2B in an untapped niche with a near-guaranteed path to profitability and an extensive client list waiting in the wings) it might not be the best time to quit your day job.
And I expect better from Bloomberg when it comes to clickbait.
The way I interpreted the article was that more money is being poured into the seed stage funding, and late-stage funding is drying up. This has also been my experience working for a VC backed startup and seeing our competitors recently go out of business because they did not build sustainable models and couldn't get late stage funding.
Investing more at the seed stage also makes sense because it allows the investor to diversify with a smaller amount of capital, and potentially exit earlier (if the company can get late stage funding and the early investors can get out through it or a secondary market).
This behavior is in line with your observations of a concentration of investment in winners (and in line with GSV Capital's public statements from the 2Q earnings call earlier this week). It is also consistent with the article's statement that now may be a good time to quit your job, as seed stage is frothy.
> So it's a concentration of investment in likely winners.
It's not clear that's what is occurring now. I think you're confused by the outsized deals reference about last Summer - they're not saying that's what is causing the index to spike now; they're saying it's what caused the spike last Summer, such that comparing today vs a year ago should come with a flag about that data.
Huh, you may be right. The notion that the index is ever susceptible to large one-off deals, though, still makes it suspect as an indicator of the general health of the tech startup industry. Similar to how high customer concentration can cause the valuation of a business to be lower than an unconcentrated customer base with similar revenue.
> And I expect better from Bloomberg when it comes to clickbait.
It's funny you mention that ... over the past week, I've found myself seeing more bloomberg promoted posts on facebook (I've been purging/blocking "viral" pages from my feed), and thought to myself, "these are awfully clickbaity". This is anecdotal of course ... but thought it was funny to see the same thought mentioned here :)
So it's a concentration of investment in likely winners. Unless you have some unique edge (i.e. you're B2B in an untapped niche with a near-guaranteed path to profitability and an extensive client list waiting in the wings) it might not be the best time to quit your day job.
And I expect better from Bloomberg when it comes to clickbait.