As Y Combinator founder Paul Graham said in an open letter to YC companies last night, investors are already convinced that Facebook’s IPO “will hurt the market for earlier stage startups.”
In short, it means valuations are coming back down to earth. Early-stage investors can no longer be sure that the public markets will provide an easy, gullible cash-out for the companies they invest in, no matter how ridiculously inflated their valuations are.
