Funny juxtaposition. The media cannot get the story straight. First the WSJ publishes a Serious Editorial that Few Businesses Sprout, With Even Fewer Jobs, especially from a dearth of venture-capital startups. They added a nice chart (below), and made this assertion:
Venture-capital firms that typically invest in young companies, as well as angel investors that focus on early-stage start-ups, are pulling back as they struggle to sell the companies they already own.
Then the NYT opines As Technology Deals Boom, the Talk Turns to Bubbles, which makes this assertion:
Is the world ready for another Internet bubble? Ready or not, it appears to be coming. In fact, it may already be here. And it seems to look, not surprisingly, like the last Internet bubble.
The NYT is tracking a storyline emerging from Silicon Valley, of the SuperAngel bubble that I have been reporting on. Last week at the Web 2.0 conference in SF two leading venture capitalists faced off for a discussion of whether this was a bubble or not.
The facilitator hoped for a SuperAngel smackdown, and instead got a fairly good discussion of what is bubbling in Silicon Valley (and Silicon Alley in NYC).
On the SuperAngel side, Fred Wilson of Union Square Ventures said he had seen irrational bidding up of deals, and was worried. He had blogged that he was seeing Storm Warnings of too much capital pouring into deals:
I think the competition for “hot” deals is making people crazy and I am seeing many more unnatural acts from investors happening. If it were just valuations rising quickly, I’d be a bit less concerned. But we are also seeing large deals ($5mm to $15mm) getting done in a few days with little or no due diligence. Investors are showing up at the first meeting with term sheets. I have never seen phases like this end nicely.
On the traditional VC side, John Doerr of Kleiner Perkins, the very model of a modern venture capitalist, sees this as the beginnings of a new tech boom, not the blowoff top of irrational exuberance as in 2000. He concludes with:
Booms are good!
While it comes across as a Gordon Gecko sort of comment, I think John has the better of this argument. The reason the SuperAngel bubble is not showing up in the WSJ stats is that it is a very small phenom right now, nothing like the dot-com bubble. A bubblet, not a bubble. This is how new tech booms start, and it adds more support for a coming tech boom that will rival the PC craze from 1978-83 and the dot-com mania from 1995-00.
