Tags: Wall Street | Silicon Valley | venture | capital

Wall Street and Silicon Valley: So Perfect Together

By    |   Friday, 03 April 2015 07:20 AM

Silicon Valley denizens love to look down on Wall Street, while at the same time lapping up its money.

Legendary venture capitalist Tom Perkins wrote in his memoirs that "at the end of the world, after all the sharks have long gone, the investment bankers will outlive the cockroaches."

But he and his fellow capitalists don't appear too upset when Wall Street banks and their customers pour money into the start-ups backed by venture capitalists.

Indeed, it is the support of Wall Street that allows the venture capitalists to make their millions—or billions in some cases, including Perkins.

Of course, the titans of Silicon Valley are less eager to pay Wall Street banks for underwriting their initial public offerings.

It could easily be said that Silicon Valley and Wall Street are made for each other—united in greed. Wall Street is more upfront about its greed, but Silicon Valley wasn't exactly built on altruism.

In any case, "it appears the relationship between Wall Street and Silicon Valley has thawed," writes New York Times columnist Andrew Ross Sorkin.

"You could say it has even matured. It now appears that a new sort of symbiotic relationship has finally begun to develop as the latest Digital Gold Rush presses on," he adds.

"The newest new, new thing is a full embrace of the East Coast financial types by putting them squarely in the middle of the entrepreneurial action in a meaningful way. Indeed, the foxes are now guarding the henhouses."

Meanwhile, billionaire entrepreneur Mark Cuban sees a bubble in the technology venture capital sector. He says that angel investors have put huge money into private companies, and might not be able to extract that money if trouble arises.

"I have absolutely no doubt in my mind that most of these individual Angels and crowd funders are currently under water in their investments. Absolutely none. I say most. The percentage could be higher," Cuban writes in his blog.

"Why? Because there is ZERO liquidity for any of those investments. None. Zero. Zip. The only thing worse than a market with collapsing valuations is a market with no valuations and no liquidity. If stock in a company is worth what somebody will pay for it, what is the stock of a company worth when there is no place to sell it?"

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Silicon Valley denizens love to look down on Wall Street, while at the same time lapping up its money.
Wall Street, Silicon Valley, venture, capital
Friday, 03 April 2015 07:20 AM
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