The clock you see at the right is a proxy for the state of the market for the stock of venture capital backed companies. 12 o’clock is viewed as the high point in the market while 6 o’clock is the low point of the market. 9 o’clock is viewed as the middle of a bull (rising) market while 3 o’clock is the middle of a bear (falling) market. These are macroeconomic cycles where a full 12 hours equates to an average of 3 years historically. However, some cycles have been less than a year and others as long as 15 years, so there are no guarantees that current conditions will last any particular amount of time.

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Our market clock currently shows 11 o’clock which means that the venture capital industry is in an upswing and near the top of the market. The number of venture capital backed companies in the IPO queue for 2015 is a substantial increase over 2014. When the IPO market is strong, then the M&A market tends to be strong as well as companies with cheap public currency will rush out to make strategic acquisitions while they can still afford it. Other indicators of the state are the 41 venture capital backed companies that have private valuations exceeding $1 billion at the time of this writing.

The mezzanine and secondary capital institutions that fueled these valuations are not long term investors and did so because they view IPO liquidity at even higher valuations to be imminent.