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Illustration: Axios / Lazaro Gamio

Tech startups aren't the only ones in Silicon Valley that want to be unicorns. More and more VC firms are seeking to raise new funds of at least $1 billion, either for new flagships or growth-focused sidecars.

Why it matters: The last time we saw such a trend was during the dotcom era's waning days.

Why this time it's different:

  • Startups are staying private longer, thus requiring more capital.
  • VCs need deeper pockets to at least avoid major dilution. Even Sequoia Capital has seen its original Airbnb ownership fall from 20% to around 13%, per a source.
  • SoftBank, even though none of these new funds is really seeking to compete with it.
  • There has been intense valuation inflation for venerable tech stocks —yes, even compared to the bubble days — so private valuations are really just following their public market peers.
  • There are viable markets for new tech product (i.e., the startups aren't ahead of consumer and enterprise demand/willingness to try).
  • Increased fund sizes in 2000-2002 were to write bigger checks for the same early-stage strategies, whereas this time it's for complimentary strategies.

Why this time it's the same:

  • Per a longtime LP: "Never get confused. It's almost always a fee grab."
  • Everyone is still judged on comparative returns, so individual funds won't be exorcised for broad-based growth-stage carnage.
  • Fund capital is widely available, in part, because of a reverse denominator effect.
  • The business just looks so easy right now, which is why so many novices (and corporates) are pushing in.
  • Overcapitalizing startups hasn't become any smarter of an ROI strategy.
  • Fund size tails will wag check size dogs, no matter how often VCs tell themselves they won't.

Bottom line: We won't know who's right for at least five years, if not longer. But for now we do know that the stakes have become much, much higher.

Go deeper

Trump's coronavirus adviser Scott Atlas resigns

Photo: Nicholas Kamm/AFP via Getty

Scott Atlas, a controversial member of the White House coronavirus task force, handed in his resignation on Monday, according to three administration officials who discussed Atlas' resignation with Axios.

Why it matters: President Trump brought in Atlas as a counterpoint to NIAID director Anthony Fauci, whose warnings about the pandemic were dismissed by the Trump administration. With Trump now fixated on election fraud conspiracy theories, Atlas' detail comes to a natural end.

Dave Lawler, author of World
2 hours ago - World

Assassination in Iran sets stage for tense final 50 days of Trump

The funeral ceremony in Tehran. Photo: Iranian Defense Ministry via Getty

Iranian leaders are weighing their response to the assassination of Mohsen Fakhrizadeh, known as the father of Iran’s military nuclear program, who was given a state funeral Monday in Tehran.

The big picture: Iran has accused Israel of carrying out Friday’s attack, but senior leaders have suggested that they’ll choose patience over an immediate escalation that could play into the hands of the Israelis and the outgoing Trump administration.

Updated 4 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Hospital crisis deepens as holiday season nears.
  2. Vaccine: Moderna to file for FDA emergency use authorizationVaccinating rural America won't be easy — Being last in the vaccine queue is young people's next big COVID test.
  3. Politics: Bipartisan group of senators seeks stimulus dealChuck Grassley returns to Senate after recovering from COVID-19.
  4. States: Cuomo orders emergency hospital protocols as COVID capacity dwindles.
  5. Economy: Wall Street wonders how bad economy has to get for Congress to act.
  6. 🎧 Podcast: The state of play of the top vaccines.