A16z's growth fund lead, David George, just said the quiet truth out loud: markets systematically misprice companies growing above 30%.
His fund's current portfolio is growing 112% annually. They entered at 21x revenue. And George thinks that's a steal.
The thesis is deceptively simple: growth "takes care of so much for you." But the real insight is why high-growth companies remain undervalued despite decades of evidence that growth compounds longer than models predict.
THE MODELING PROBLEM
No analyst builds a 10-year model showing 20% growth persisting. It feels "unnatural," George notes. So they don't. And when they're wrong, as they were with Apple by 3x between 2009-2013, one of the most-covered companies on Earth, they're not wrong by a little. They're wrong by multiples.
This isn't a bug in analyst behavior. It's a feature. Career risk punishes the analyst who models aggressive growth that doesn't materialize far more than it rewards the one who underestimated Google's trajectory for two decades.
WHAT THIS MEANS FOR FOUNDERS
If a16z's thesis is right, the implication for founders raising growth rounds is counterintuitive: your valuation might be too low, not too high.
The conventional wisdom says growth-stage valuations are stretched. George is arguing the opposite, that 21x revenue for a 112% grower is cheap compared to paying 15x EBITDA for a 12% grower in PE. The math favors compounding, but institutional conservatism can't model it.
THE CATCH
This only works if growth persists. And that's exactly what's hard to predict. George is essentially betting that his team can identify "modelbusters” that are essentially companies that will keep growing long after consensus expects them to plateau.
For entrepreneurs, the takeaway isn't to demand higher valuations. It's to understand that if you're genuinely on a high-growth trajectory, the market probably isn't giving you full credit for it. The investors who recognize this asymmetry are the ones worth partnering with.
The question is whether you're actually a modelbusters or just hoping you are.
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