The Hot Crazy Matrix explains why investors get tech deals wrong
The article discusses the rise and fall of private equity deals in the tech industry. In 2021, private equity deals reached an all-time high, with a total value exceeding $1 trillion and an average deal size of over $1 billion. Founders were highly sought after, and valuations soared as investors raced to secure a piece of the action. However, by 2023, many of these same companies, such as Klarna and Stripe, had lost billions in value. Klarna's valuation plummeted by 85% from its 2021 peak of $45.6 billion to $6.7 billion in 2022, while Stripe's valuation fell from $95 billion in 2021 to $50 billion in 2023. The article suggests that the tech industry's rapid growth and subsequent decline have left investors with lessons to learn about the volatility and unpredictability of the market.
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