Possibly.

But Sandwich Video's decision to accept equity is obviously based on an assumption that start-ups continue to reach high valuations.

So if we're at the top, Sandwich Video is late. In that case, cash out now by purchasing a video. The service provider will suffer the valuation loss.

There's definitely adverse selection bias. The companies that can raise the money from a good investor will raise the money and pay for the video. The ones that can't will take the video. Sandwich only gets equity in the companies that can't sell their equity to someone who's a professional equity buyer.

I saw this dynamic in the 90s. My portfolio had several of the top web design firms. They were amazing at what they did. But they saw some of their clients become multi-billion dollar companies and decided they wanted equity instead of cash. Some clients agreed, others did not.

Of the dozens of companies they got equity in, instead of being paid cash, all of them failed. That is, every single one went to zero.

Seems like a pretty weak signal to me. They're just expecting startups they like to go up at all. That doesn't require crazy valuations or buyouts. And even with a mild loss in value they can make a profit on the video production side.