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One of Tech's Best Investors Keeps Passing on Deals Because Valuations Are Too Damn High

"Prices have been extraordinarily high for a while now and demand flawless execution and a lot of luck," says Bessemer's Jeremy Levine.

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Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

Jeremy Levine knows a good deal when he sees one. As a top venture capitalist at Bessemer Venture Partners, he invested in Pinterest, LinkedIn, Yelp and Shopify well before they reached peak popularity and watched as the last three went public.

But over the last 20 months, Levine has led just one new investment, which has yet to be announced. The reason for the pause? Valuations are still just too damn high, he says.

“Prices — especially for late-stage deals — have been extraordinarily high for a while now and demand flawless execution and a lot of luck,” Levine said in an email following an in-person meeting. “The former is extremely hard to achieve, and the latter is obviously outside anyone’s control. Therefore, I believe a lot of the private deals that have [been] getting done recently are providing very poor risk-adjusted returns for investors.”

“Perhaps the dramatic cool-off in the public markets over the last week will start to change things in the private markets,” he added.

In addition to the one investment Levine led, he collaborated with colleagues on two others. But that total is still below what it has been over previous 20-month time periods in more reasonable times, he said.

It’s not for lack of trying. Levine said he has made investment offers to at least another half dozen startups during this period that rebuffed him for competing valuation offers that were in many cases more than two times what he offered. Rather than match, he said, he’d rather sit on the sidelines a bit.

“I’m more interested in being an investor that wants to back entrepreneurs when other investors are scared or skeptical,” he said. “I’m much less keen to be an investor that regularly enters (and wins) beauty contests.”

Levine also lost out on one investment where his and a competing investor’s offer were similar, but that was the exception more than the rule during this time frame. The upside of valuation frothiness? It can help when promising startups are looking to sell or go public. Three of Levine’s portfolio companies have been acquired in the last 15 months and two others, Shopify and Mindbody, went public this year.

Levine is certainly not alone among top VCs sounding the valuation alarms. This week another top VC, Benchmark’s Bill Gurley, warned entrepreneurs that dark times were coming for highly-valued startups focused exclusively on growth at the expense of profitability.

There’s likely some gamesmanship at play, too. If smart, respected investors are saying valuations are out of control, maybe other investors and entrepreneurs will start to believe it, bringing down prices in the process.

Especially if, ahem, the media keeps writing about it.

This article originally appeared on Recode.net.