There are some bad headlines being repeated today, all basically saying that VC funding is back to dotcom levels. Wrong. It’s not even close, with something like $32-billion set to go in this year, versus $51.2-billion at the peak of the bubble.
Sure, it’s the highest it’s been in four years, but you might equally write that VC funding is still 36% off its dotcom peak, or that it is more or less flat year-over-year. Instead we have this irresponsible stuff.
How this meme has taken hold I don’t know, but they’re all pulling from some new E&Y/Ventureone figures — which say nothing like what the headline writers are writing.
Related posts:
Paul,
If judging a bubble were simply about the absolute dollars invested your point would be well taken. But let’s not forget that at the “peak of the bubble” we had a significantly better IPO climate; so it allowed for many otherwise flawed VC investments to escape into the public equity domain (where many of us ended up feeling pain, but that’s another story).
We’re now seeing $30B+ flowing into VC with no end in sight, yet we have a much tighter exit market and, frankly, we’re seeing a lot of companies with, shall we say, exogenous business models to boot.
*** Extremely healthy fund raising conditions for new VC vintages
*** Lots of “me too” investments (61 other video sharing companies and counting)
*** Lots of VCs explaining why it’s “different this time”
*** Increasingly more challenging deal closures (higher valuations, more funds chasing the same term sheets)
*** Tight exit market
*** Lots of concepts getting funded in search of business models
That’s sounding a LOT like a bubble. Perhaps you doth protest too much.
VC is the incubator where isolated bubbles are allowed. In the aggregate, yes a bubble.
It’s where risk-prone capital gravitates and where the responsibility for due dilligence falls more directly upon the risk-taker.
I see public equity well protected as it should be. It’s ALWAYS differenter this time.
Thanks for noticing this paul. Not only was the article wrong in its “half-glass full” argument, but also in its decision to use 2001 as the peak:
http://www.pehub.com/wordpress/?p=305