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Tags: Case | Cuban | bubble | technology

Steve Case: Sorry Mark Cuban, There's No Bubble in Tech Venture Capital

By    |   Monday, 09 March 2015 07:40 AM

Not surprisingly for a co-founder of once-dominant Internet portal AOL, Steve Case disagrees with star entrepreneur Mark Cuban's view that the technology sector of venture capital companies is in a bubble.

"There's a lot of capital, maybe a little froth in places like San Francisco or New York City or Boston, the tech hubs," Case told CNBC.

"But most of the country is desperately in need of capital. Most entrepreneurs need those angel [investors] in their communities to support them, and I'm hopeful that there will be more people who are supportive of these young startups."

Valuations for late-stage venture capital companies that are poised to go public might be a bit excessive, but discipline is returning to the initial public offering market, Case said.

"Setting the value of those companies is becoming tricky, and some of those really late-stage private valuations may have trouble supporting themselves," he added.

"Not all will be successful. Obviously investing in startups is risky, as most startups fail. But some will be successful. And some of those little companies will be the big companies of tomorrow creating the jobs and the growth for the communities and for the country."

Cuban told CNBC that the bubble this time around is worse than the dot-com bubble that burst in 2000. Todd Dagres, a founding partner at venture capital firm Spark Capital in Boston, doesn't see it as quite that dire.

"We are definitely in a bubble," he told Bloomberg. "If you wake up in a room full of unicorns, you are dreaming and you can’t expect the dream to continue." But, Dagres cautioned, "This one is not as bad as 2000."

More than 50 U.S. venture-backed tech companies hit the magic $1 billion mark for valuation during the last two years, according to CB Insights. That includes home-sharing service Airbnb, photo-sharing app Snapchat and the online bulletin board Pinterest.

"These large, high-priced private financings are the defining characteristic of this particular technology cycle," Bill Gurley, a partner at Benchmark in Menlo Park, Calif., wrote on his blog.

Airbnb has a valuation of $20 billion or more, Snapchat of $19 billion and Pinterest of $11 billion, Bloomberg reported.

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StreetTalk
Not surprisingly for a co-founder of once-dominant Internet portal AOL, Steve Case disagrees with star entrepreneur Mark Cuban's view that the technology sector of venture capital companies is in a bubble.
Case, Cuban, bubble, technology
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2015-40-09
Monday, 09 March 2015 07:40 AM
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