Stop to litigate! Tell your industry bubble exists in the data

cloud network hunting note: today, the new technology companies as a rising star booming growth, has attracted countless investors invest their money, sustained growth and investment number, amount, is the spring of new technology companies. But some worry, whether this phenomenon will make the mistake of the dotcom bubble in 2000? Does the money will make these investors suffer? This article on the venture capital industry only stays in the mouth quarrel fight, instead focus on analysis of data, for you to analyze whether bubbles really exist, if any, is about to burst? In this paper, the author is Bill Maris, is the President of Google Ventures and managing partner.

I have heard that people want to know whether we entered the bubble era and new technology company. It is like the Internet bubble of 2000 (it is to point to by 1995 to 2001 of speculative bubble events related to information technology and Internet. In Europe, America and Asia more than the stock market, high-speed Internet and information technology related enterprise’s share price rose, on March 10, 2000, the nasdaq index reached 5408.60 when the top of the peak, and closing at 5048.62. During this period, western speculators saw the rapid growth of the Internet sector and related fields, to this on the one hand, speculation. Nature as bad? Or worse? I think, in order to get a beyond the conclusions of personal opinion, worth collecting data available. So, I consulted Google venture capital funds within the engineering team, further discover bubble problem, find out data to prove that point of view. In this report, I will share my conclusion.

go back to the late 1990 s, venture capitalists interested in Internet business. A lot of wealth into some had a major failure of the company, a lot of people lost a large sum of wealth.

looking for another 2015 years. If you read about Uber (one of our portfolio companies), reality, Dropbox such worth billions of the title of the company, it is easy to understand why some people feel irritable. Do all people will be like those people in 1999 for the new platform and a new economic model too excited and lost his head? Or this is not the same? There are two views on the matter.

“evidence” against this phenomenon is bubble
The following data revealed the risk investment growth, but also reveals the dotcom bubble and new technology company of four key difference.

company public time slower
When the Internet bubble in 2000, many companies with a little turnover was in a hurry. Today, those startups are to spend more time preparing for listing.

show the total amount of investment is far lower than the peak of 2000
2000, money flows into venture capital market, venture investors with those into the money market fund some possible successful company, the results of these companies because some big mistakes and disappointing. Now, risk investment trends to rise, but still far below the 2000 peak levels.

investment trading volume keep a fairly stable state
In 2000, the venture capital deals broke through 2000. What are the changes you may not feel, but since 2007, the total volume of venture capital has been a considerable degree of steady state. Obviously, compared with 2000 state of madness, investors are still maintained the rational careful attitude.

venture invest more funds, but it is only half the height of 2000
Venture capital investment surge in 2013 and 2014, but still far below the dotcom bubble peak levels.

in the Internet bubble in 2000, many investors’ money is pouring into more investment risk. Now, the risk investor’s investment amount in the growth, but the number of deals. What happened? We will see, investors will invest their money focus with relatively little company, but every company get huge.

support this phenomenon is a bubble “evidence”
Our data analysis not only reveals the positive side on this issue, there are six disturbing signs. These signs that we may have entered another tech bubble.

investors invested more money after several rounds of
If you accept the late wholesale funding is moving towards the IPO only replace once only road of development, so this is not a worrying phenomenon. Still, it’s not hard to see these phenomena have similarities with the Internet bubble in 2000.

unlisted venture company valuation is abruptly ascend
Until now, from the data, we found that the current environment more modest than in 2000. Today’s company valuations presents an entirely different look:

valuations are growing faster than vc investment

the valuation of listed companies at an alarming rate rise
The valuation of listed companies rallied, but the most successful companies tend to wait for a higher price listed (they in order to get higher valuations, unwilling to wait longer).

wholesale funding is becoming the new “export” late
The late wholesale funding and purchase prices are on the rise; At the same time, the valuation of listed companies in the fall. Financing and acquisitions late affect the company’s listing plan.
exit returns ratio is lowering
The data show that the growth rate of the valuation of listed companies is better than private company valuation of the late growth. In fact, if we take a closer look at late valuation of listed companies and private companies valuation point of view, the ratio of we can find that the ratio has dropped since 2009. This means that investors late compared with the past, can only look forward to lower returns.
When we look at the data, we know only one thing: really different from 2000 in 2015. Some reassuring to change (for example, venture investors held steady investment amount), at the same time, some other data disturbing (for example, high value and falling out returns ratio).
Late financing amount rising, which can be interpreted from two angles: first, a large number of companies from the VC in the late high financing, so that they no longer choose difficult IPO journey; Second, the development of technology make the company get a faster growth rate, the late wholesale funding to support the development of the company, without the need for an IPO.

so we concluded that even though the economic bubble really, this is different from the 2000 bubble, market and technology environment in these 15 years, great changes have taken place.

of course, entrepreneurial companies will still face failure, under today’s huge valuations to attention, a greater role in these failures look. But this does not mean that the sky is falling. When one of the great value of the company failed – this thing is inevitable, we will have to take a deep breath and ask yourself: is it a end, or part of the normal failure rate? Perhaps, when alert, we should take a look at the data.
Source: TC