I looked at a16z portfolio [1] and could not find any "real" liquidity event, meaning IPO or big acquisition. There are a number of really high valuation companies, though, which are mostly based on the last round funding, often led by a16z. Now, a natural question is who exactly is benefiting from the high valuation? OK, certainly not the employees as most of them are not vested, and even if they have, they can't sell to anyone, and there is no cash dividend. The founders and top management sometimes can negotiate a better deals financially in these funding rounds [2], and in general can be resume boosters for them, so they do benefit somewhat from the high valuation. The LPs are not exactly getting anything at this time as the gain is not realized yet. That leaves the VCs who have a huge incentives to lead big rounds, as their incomes are proportional to the size of the funds they raise from LPs as detailed in this HBR article [3]. Given this dynamics, I am not surprised to see average startups with average products get funded at a hugely inflated valuation. I just hope that the LPs are investing with their own money, and are not retirement fund managers (specifically, not MY retirement fund).

[1] http://a16z.com/portfolio/

[2] http://allthingsd.com/20111001/vcs-unite-chamath-palihapitiy...

[3] http://blogs.hbr.org/2014/08/venture-capitalists-get-paid-we...