Distant Echoes of the Equity Bubble

Savvy comments from the OVP newsletter on the current mini venture-financing boom:

Some VC firms formed in 1999 or 2000 have a five year limit on investing in new companies. Over the last year, they started to hear the clock ticking, loudly. If they were going to expand their portfolios, and put the money to work they were drawing fees against, it had to be now. The result has been a dramatic step up in cash going in and prices paid for Series B and C deals. While on the surface it appears a new bubble is forming, this will be short-lived and narrowly focused. Yes, the piper will be paid when these now overvalued companies reach liquidity in a few years, but this is not an industry-wide trend. It is an aberration constrained to those VC firms in that specific circumstance. Over the next 12 months as the clock winds down and as those same firms raise new funds, the artificial pressure to invest will abate.