Why Does John Somorjai Say Many Venture Valuations Will Not Last?

John Somorjai says many venture valuations will not last because they are way too high, the set of buyers is small, and the companies will not be able to grow into those prices. He calls a lot of the investing irresponsible and expects a reckoning. He does not know when, and he calls it inevitable. Very few companies go public, probably one percent or less, so an exit depends on who could buy the company. Above 10 billion dollars, that buyer set is so small, yet he sees many enormous multibillion-dollar valuations. He also says those prices will be bad for employees.

Founders usually want the highest valuation they can get, and he says that is not usually the best decision. Generational companies are rare. Salesforce Ventures invested in six rounds of Anthropic because the first meeting made clear that the founders were exceptional. A lot of what he sees is mediocre and should not command valuations of 10 billion dollars or more. More discipline, he says, is warranted.