Start-ups nowadays present a greater risk to investors
because they're getting too much money before maturing as companies,
Bill Gurley said Friday.
"The problem that's driving the risk is just the
large amounts of money that are going into these nascent private
companies," the general partner at Benchmark told CNBC's "Squawk Alley."
"If you go back 10 to 15 years ago, it was very rare for any company to
raise more than, say, $50 million prior to their IPO. Now we're
cramming hundreds of millions of dollars into companies that are very
early-staged."
The Wall Street Journal reported on Feb. 18 that there are 73 start-ups valued at at least $1 billion around the world.
Gurley added that receiving large amounts of money
at such an early stage can ultimately cripple startups down the road.
"The money that goes in piles up in terms of liquidation preference and
eventually that turns into such a big weight that they can't get more
financing. You saw that with Aereo," he said.
Read MoreThe unicornification of Silicon Valley continues
Aereo, a company that provided live television
streaming on Internet-connected devices, filed for bankruptcy last
November and raised about $2 million from its assets auction this week.
Hopefully, if we get five to 10 of those, people
will start acting a little more sane," he also said. Nevertheless,
Gurley said he believed this trend would continue. "From my point of
view, it's better if we don't accelerate the stupidity. If that happens,
we're going to have a really big correction. I'd rather see something
that's more pragmatic."
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