> valuations are up on average maybe 3x since i started,
   > and it's not clear the companies are 3x more valuable.

This is something I've been thinking about as well. Are companies creating less value? Or is the value being going elsewhere?

In a constrained supply there might be an argument that things that wouldn't have been funded before, now are, and those represent less value creating ideas. But it seems YC is always oversubscribed, would that keep the quality high?

Is the vision of the investors getting cloudy, or more specifically are there still companies that are 3x as valuable but they are being funded elsewhere?

Or is just the capital availability pushing down the yield price on seed rounds?

I don't have any answers, but its interesting to think about.

> Or is just the capital availability pushing down the yield price on seed rounds?

This is almost certainly the case - I recall valuations in 2009 / 2010 vs now, and the gap is absolutely crazy. A lot of that has to do with the deluge of angel money floating around partially as an offshoot of the big-name IPO's like Facebook, but more broadly, we are in a financial world that is desperately chasing yield anyway it can get it - and a seed round is the lowest level commitment of it (that and the high end rounds). The rub, as it lies, is the middle tier.

Surely value going elsewhere is a Good Thing. There are few places for value created by investment to go if not back to Capital, and especially if you cannot see it going in balance sheets, and that's usually to wider society.

Investment in trains/railroads in the 19C seems a good example. Perhaps the first eyrie canal almost single handed my built the wealth of the USA - having all that return to the Mayor of NY might not be the best idea.

I think we can all we the potential value of many of the start ups on the scene - and I think it is a positive that it is hard for them to capture all that value.

Surely the simplest explanation would be that angels investors in the valley have been making money, and are therefore investing more.

Can you comment in general on when you consider a seed round to be overpriced, and what exactly goes into that determination?

I see several seed rounds (~$1-2m rounds - not sure if this is also the size you're referring to) on crowdfunding sites priced at $10m or so pre-money, with revenues just starting to approach ~$100k per month, and so far haven't invested in any because they all struck me as overpriced. They would definitely have been way cheaper a few years back in that same situation.

>[...] it's not clear the companies are 3x more valuable

However, companies are probably somewhat more valuable, right? I mean, the world seems to be learning about entrepreneurship the same way it was learning about manufacturing during the industrial revolution. That to me would indicate that the average value of startups is increasing.