(public).sospep.subjects ~ view article ~ the-tech-bubble-didnt-burst-this-year

<h1 style="text-align: center;">the tech bubble didn't burst this year. just wait</h1>
<h2>[WHAT]</h2>
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<li>] by Max Chafkin @bloomberg..com - ] Chafkin outlines the current silicon valley investment climate, VCs are awash in money, but it is targeted towards only a handful of the most successful companies. Indicators are showing a 20+% fall in the past year and some bears are comparing the market to the mortgage debacle of 2008</li>
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<h2>[WHY]</h2>
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<li>]&nbsp;</li>
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<h2>[WHERE]</h2>
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<li><strong>] READ THE FULL ARTICLE</strong></li>
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<li>]&nbsp;<a href="https://www.bloomberg.com/news/articles/2016-10-20/the-tech-bubble-didn-t-burst-this-year-just-wait" target="_blank">The Tech Bubble Didn&rsquo;t Burst This Year</a>&nbsp;(bloomberg.com)&nbsp;</li>
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<h2>[WHEN]</h2>
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<li>] 2016-10-24</li>
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<h2>[EXAMPLE]</h2>
<p>- 2012 - a talented entrepreneur could walk into a venture capitalist&rsquo;s office, say his startup was a mobile-first solution for pretty much any problem (payments! photos! blogging!), and walk out with a good-size seed investment. &ldquo;That pitch was enough to get going,&rdquo; says Roelof Botha, a partner with VC firm Sequoia Capital. &ldquo;It&rsquo;s not enough anymore.&rdquo;</p>
<p>Botha should know. Over the past five years he&rsquo;s been one of Silicon Valley&rsquo;s most successful investors, thanks to early bets on such companies as Instagram, Tumblr, and Square, all successes owed to the mass adoption of smartphones. Now, though, smartphone growth rates are near zero in the U.S. and falling around the world. And while there are candidates to succeed the iPhone as the next revolutionary computing platform (wearable gadgets, virtual reality), none has made a compelling must-have argument to the mainstream.</p>
<p><strong>The Bloomberg U.S. Startups Barometer</strong>&mdash;an index that considers capital raised and number of deals, first financings, and successful acquisitions or initial public offerings&mdash;remains high by historical standards but <strong>has fallen 21 percent since November 2015.</strong></p>
<p><strong>Startups&rsquo; struggles to grow and woo venture capitalists are only half the story</strong>, though, because the<strong> VCs themselves are more flush than ever.</strong> With global interest rates low, Silicon Valley remains a safe-looking diversification strategy for investors, especially wealthy Middle Easterners and Russians with little regard for rates of return.&nbsp;</p>
<p><strong>VCs raised $12 billion in the first quarter of 2016, which the industry&rsquo;s trade group says marked a 10-year high. &ldquo;The world has never seen an investment climate like this one,&rdquo; says Bill Gurley, a partner with Benchmark who led the firm&rsquo;s investment in Uber. &ldquo;It&rsquo;s hard to express how much money is out there.&rdquo;</strong></p>
<p><strong>A tech industry with tons of cash and few sure bets has helped the biggest startups, such as Uber, Airbnb, and Snapchat.</strong> These so-called <strong>unicorns have been able to raise almost unlimited funds.</strong> Uber, valued at about $69 billion, is the most valuable American car company by some margin, worth more than General Motors and Fiat Chrysler combined. Airbnb is valued at $30 billion, more than any hotel chain on the planet. Snapchat is said to be preparing for an IPO at a price of at least $25 billion, 25 times what Facebook paid for Instagram in 2012.</p>
<p>&nbsp;&ldquo;There are a whole bunch of businesses that are good, not great, but they&rsquo;ve raised money as if they were great,&rdquo; says Social Capital founder Chamath Palihapitiya.&nbsp;</p>
<p><strong>Good-not-great businesses won&rsquo;t last forever, but they&rsquo;ll be cushioned for months or even years by the huge sums they&rsquo;ve raised</strong>, says Benchmark&rsquo;s Gurley. &ldquo;We&rsquo;re in a slow correction,&rdquo; he says. <strong>&ldquo;You might see a unicorn go down once a quarter,&rdquo; instead of a crash taking them all down at once.</strong> The <strong>latest victim: Mode Media,</strong> a network of lifestyle blogs that once claimed more than 90 million monthly U.S. users and a valuation above $1 billion, announced its imminent shutdown in September.&nbsp;</p>
<p><strong>The slow-motion bust could be a prelude to something more dramatic,</strong> says Gurley, the Valley&rsquo;s most outspoken bear. He compares the tech funding climate to the mortgage industry&rsquo;s precrisis embrace of collateralized debt obligations. <strong>An economic shock or a sharp rise in interest rates could well cause the VC bedrock&mdash;pensions, mutual funds, university endowments&mdash;to pull back dramatically</strong> and wreck the valuations of some startups.</p>
<h2>[HOW-TO]</h2>
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<li>]</li>
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<h2>[REFERENCE]</h2>
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<li>] SRC = <a href="/view/article?id=5334" target="_blank">best-of-HN-2016-10-20</a>, (#) comments (#)</li>
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<h1 style="text-align: center;">&nbsp;</h1>

~ view article ~ Chapter] ch-999-index FROM [ Book] startup-investor IN [ libraries] business