Is It Time for Wealthy Tech Investors to Lie Flat?

The bloodbath in the frothiest corners of financial markets may have some venture capitalists wondering if it’s time to walk away.

While it’s too early to say the good times are over — tech stocks rebounded strongly at the start of this week — there's bound to be some kind of reckoning for startups: landing a high-priced exit may get harder for their financial backers. Some may reflect it’s not worth the effort and head off to the beach — embracing a flavor of the “lie flat” philosophy of Chinese millennials who are opting out of the rat race. Don’t take my word for it. Here’s Miami-based venture capitalist Keith Rabois’s assessment in the wake of recent market mayhem.

VCs could certainly use a break: Total funding for startups doubled to almost $160 billion in the third quarter compared to the same period a year ago, according to data provider CB Insights.

Competition for deals has intensified with non-traditional tech investors such as family offices, mutual, sovereign-wealth and hedge funds joining the fray. To keep pace with free-spending giants like SoftBank Group Corp. and Tiger Global Management, funding rounds that once took weeks have been compressed into a few days. It makes you wonder how much due diligence everyone’s doing.

Naturally, prices have shot up too. It’s common for valuations to double in late-stage U.S. funding rounds and again when there’s an exit via an initial public offering, according to PitchBook data.