Tags: venture | capitalists | bubble | market

Venture Capitalists: What Bubble?

By    |   Wednesday, 14 May 2014 09:03 AM

Many financial experts have expressed concern that a bubble may be brewing in the venture capital market.

Not surprisingly, many venture capitalists maintain that everything is hunky dory.

"The first rule of 'Fight Club' is you never talk about 'Fight Club.' Well, the first rule of bubbles is that, if everybody is talking about it, then it isn't a bubble," Venky Ganesan, managing director of Menlo Ventures, a top venture capital firm, told CNBC.

Editor’s Note:
Get These 4 Stocks Before 399% Stock Market Rally!

And a bubble in public markets doesn't really affect venture capital, said Scott Kupor, COO of private equity titan Andreessen Horowitz, according to CNBC. "The bubble doesn't really matter that much, especially if you're doing early-stage investing.

"So if we make an investment in an A round of a company today, which is typically the first institutional money round, that company may be going public seven, nine, 10 years from now. So what the public markets are doing quite frankly has no impact on our decision."

Young companies are receiving elevated valuations, including Airbnb and Dropbox at $10 billion. But venture capitalists say many of the valuations are justified.

"In the last bubble, you saw a lot of New Age metrics like eyeballs and visitors," Ganesan said.

"And the difference between this bubble, or this time, and last time is that now we are seeing companies growing in terms of revenues and profits. . . . And when that happens, you know there's fundamental value being created."

Jeremy Quittner of Inc. magazine doesn't think venture capital is in a bubble either. "New research indicates that the U.S. venture community is nowhere near the outlandish number of deals, or outpouring of cash for investments, seen more than a decade ago," he wrote.

Last year, venture capital firms put $29.5 billion into 4,041 deals, according to the National Venture Capital Association. Those amounts vastly trail the $105 billion invested in 8,041 deals during 2000, the year the dot.com bubble burst.

Editor’s Note: Get These 4 Stocks Before 399% Stock Market Rally!

© 2020 Newsmax Finance. All rights reserved.


   
1Like our page
2Share
InvestingAnalysis
Many financial experts have expressed concern that a bubble may be brewing in the venture capital market.
venture, capitalists, bubble, market
345
2014-03-14
Wednesday, 14 May 2014 09:03 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved