Are we back to bubble-nomics again?

I know, its dangerous to Post Before Coffee (PBC) in the morning. It increases the possibility of missing critical features of an argument, and there tends to be more bloviation, stream of approximately conciousness, and so forth.

I read an article this morning from the Wall Street Journal’s WSJ.com site that evoked many emotions and thoughts. This article was entitled “Silicon Valley Start-Ups See Cash Everywhere” with several basic points being made:

  • VC’s believe that there is a dearth of good opportunities for investment
  • They are looking to recruit deals by short circuiting some of the process, and avoid “costly competition”

There were other points, but my coffee-deprived brain seems to be missing them. Are we back to bubble-nomics? More importantly, I have always asked the question of whether an investor would recognize the next MSFT or GOOG if they were being pitched. This question makes lots of investors uncomfortable. Some investors do have a good track record, and may have a chance to do this.

But you need several elements, an almost perfect storm, to come together to make this work. Starts with a good plan, with a solid idea, in a market with large demonstrated growth and significant growth opportunity. Next, you need a smart team on the company side. Finally, you need a VC who sees and believes. When you get all three, details can be worked out.

I can believe that the good deals in Silicon Valley and Boston have been exhausted, with so much money chasing so few deals. There are good companies, with great products and ideas, in rapidly growing markets who need capital. They are out there, just not necessarily in Silicon Valley or Boston. They aren’t that hard to find. You just have to expand your horizons. If the number of good deals in your backyard has dropped off, then maybe it is time to look beyond your backyard.

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2 thoughts on “Are we back to bubble-nomics again?

  1. I always worry about the ability of VC’s to recognize something good to invest in, and even more about the ability of some of the smart people out there to make successful VC pitches.

    How many times have you seen VC’s jumping onto a bandwagon. I agree than some VC’s are sharp, but that’s a minority.

  2. I have seen something that looks like a focus upon fads, but specifically being the first or second in with the fad. This is not true in general, but when I see people complain publically that there aren’t enough good deals, then I know that they are ignoring where the good deals are, and are focusing upon what they perceive to be hot. The two are often not aligned. If there are no more good deals in Boston or the Bay Area, well, the country is big, and there are lots of very bright people here in fly-over country, with some really good ideas.

    I am still searching for the VCs focusing upon HPC and related technologies. As IDC is showing, there is real wealth being created here, at levels the VCs should find interesting. Sustainable high growth. Large and growing demand, almost insatiable.

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