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Why are Internet startups raising so much, so fast?

By
Dan Primack
Dan Primack
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By
Dan Primack
Dan Primack
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October 30, 2013, 4:36 PM ET
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FORTUNE — Pinterest last week announced that it had raised $225 million in new funding, just eight months after raising $200 million. Then came a $60 million raise by Nextdoor, which also had secured capital back in February. And then there is Snapchat, which is seeking new funds a scant four months after banking $60 million.

Each of these deals has two things in common, besides the short lag-time:

1. They all are being done at significantly higher valuations. Snapchat, for example, may go for upwards of $4 billion this time around, after being valued at $880 million back in June.

2. None of them actually need the money. Nextdoor founder Nirav Tolia, for example, said: “We had $30 million on the balance sheet and only were burning a million and a quarter million per month.”

So what does all of this mean? One possibility is that these quick follow-ons reflect early-stage investor concerns that we’re nearing a market top for consumer-facing Internet companies, and therefore are encouraging their entrepreneurs to take large rounds while still available. After all, if growth multiples were to remain constant, then each of these companies should be better off raising their next round in six or twelve months.

Admittedly, this isn’t a perfect theory. Nextdoor, for example, received term sheets from existing investors (before picking outsiders Tiger Global and Kleiner Perkins). And, no doubt, it’s hard to turn away then cash-flush late-stage investors are on their knees, wallets in hand.

But there is a real disconnect between what these companies are doing and the way that things usually work.

Remember the notion of lean startups? Or of eschewing needless dilution? Like what we recently saw with Veeva Systems (VEEV), which is now valued at $4.7 billion by the public markets after raising just a scant $7 million from one VC firm and several angels. Or Tableau Software (DATA), a $3.9 billion company that raised less than $30 million from two VCs. Sure those are both enterprise companies, but didn’t they also experience massive growth?

Raising fast doesn’t necessarily correlate to a company’s ultimate success or failure, and every situation is unique. But I’ve got a sense that this current land-grab is being driven by more than just immediate opportunity. We should know pretty soon if I’m right, or just a worrywart…

Sign up for Dan’s daily email newsletter on deals and deal-makers: GetTermSheet.com

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By Dan Primack
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