This post on the WeWork IPO ends with the following observation:
In fact, I would argue that the WeWork bull case and bear case have more in common than it seems: both are the logical conclusion of effectively unlimited capital.
I don’t think there is unlimited capital. If that were the case, every idea, every startup, every person would be able to get the capital they need/want.
And I see proof every day that is not the case.
But it is true that for some things, some companies, some ideas, there is effectively unlimited capital.
Probably the biggest change I have seen in my 30+ years in VC is the huge amounts of capital that are available to “big ideas” like WeWork, Uber, Bird, etc
And the questions to ponder are whether this is a temporary phase based on global macroeconomic conditions or the new normal and whether it is only true for companies at certain stages of their development.
Does Uber, now that it is a public company subject to the rules of rational capital markets, have the same unlimited access to capital it had while it was a private company?
Will WeWork, once it becomes a public company, have the same unlimited access to capital it has had in the last five years?
And what does the next economic downturn look like? Will capital availability dry up like it normally does?
I have heard the arguments why the business cycle has changed, why monetary policy is more effective now, and why rates will remain near zero for a long time.
I just don’t know if they are correct. I suspect we will find out in the next few years.
