Please God, Just One More Bubble. What Crying 2000's Are Calling
Updated
Chastened by the tech bust, venture capitalists and entrepreneurs have spent the last couple of years taking startups back to basics. No longer could they expect to turn an idea scribbled on a napkin into an instant company and cash out in a couple of years. To get funding and go public, companies had to have solid technology and business models, experienced management, reasonable valuations -- and, above all, profits. This reassuring regime made it easy to laugh at a bumper sticker sighted around the Valley last year: "Please God, just one more bubble."
Now, it looks less like a joke than a warning. Too many tech investors, from Wall Street to Sand Hill Road, seem to be ignoring why they crashed after the 1990s hit a dead end. Venture capitalists are pouring money into look-alike startups in nascent sectors such as social networking. Even after a recent swoon, stocks of some dot-coms, such as eBay Inc. (EBAY ), look pricey. And not only are more money-losing companies going public, initial valuations can be distinctly frothy. Google Inc.'s imminent offering, for instance, could value the search engine phenom at $36 billion. Says Bill Burnham, managing partner of the VC firm Softbank Capital Partners: "Some people expect the good old days will be back and they can party like it's 1999."
Indeed, the rise in shaky initial public offerings may be the most worrisome indicator that not all investors have learned their lesson. Some 44% of the companies going public so far this year were losing money, compared with only 30% last year, according to the investment bank Renaissance Capital. "They've lowered the bar," says Renaissance analyst Paul Bard. Why? "The VCs are pushing their companies to go out," says Jef Graham, CEO of networking startup Peribit Networks Inc., which has held off going public for now. "Bankers are like sharks smelling blood in the water."
That was a part of Bloomberg publication, dated on August 25, 2004.
It's gone 20 years or so..
- Something changed?
- Nope. Nasdaq-100 is near the same 'red lines'.
Now, it looks less like a joke than a warning. Too many tech investors, from Wall Street to Sand Hill Road, seem to be ignoring why they crashed after the 1990s hit a dead end. Venture capitalists are pouring money into look-alike startups in nascent sectors such as social networking. Even after a recent swoon, stocks of some dot-coms, such as eBay Inc. (EBAY ), look pricey. And not only are more money-losing companies going public, initial valuations can be distinctly frothy. Google Inc.'s imminent offering, for instance, could value the search engine phenom at $36 billion. Says Bill Burnham, managing partner of the VC firm Softbank Capital Partners: "Some people expect the good old days will be back and they can party like it's 1999."
Indeed, the rise in shaky initial public offerings may be the most worrisome indicator that not all investors have learned their lesson. Some 44% of the companies going public so far this year were losing money, compared with only 30% last year, according to the investment bank Renaissance Capital. "They've lowered the bar," says Renaissance analyst Paul Bard. Why? "The VCs are pushing their companies to go out," says Jef Graham, CEO of networking startup Peribit Networks Inc., which has held off going public for now. "Bankers are like sharks smelling blood in the water."
That was a part of Bloomberg publication, dated on August 25, 2004.
It's gone 20 years or so..
- Something changed?
- Nope. Nasdaq-100 is near the same 'red lines'.
Note
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Invesco QQQ is doing a business just fine, with 763% net return rate over the past 25 years and 9% compound annual growth rate (CAGR).
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