What will happen when the capital crunch, silicon valley?

if you pay attention to The technical players were reading something, may find some people talking about a book called The Accidental Superpower. I’m from Mark Suster, a famous risk investment institutions GRP Partners, a partner) heard of the book, after I read it, and at that time saw Auren Hoffman about this book. If you haven’t read this book, I can introduce, roughly technology players look to the future, we will face the world, and is not the same as the ordinary people, they don’t like ordinary people by focusing on education, computer technology or see the ruling doesn’t sit sit stable jiangshan, their eyes is a wide range of geopolitics and the change of population structure.

Peter Zeihan

to this, the author gives a explanation is that the population of the baby boom generation unprecedented huge, this generation of young, inject a large amount of capital for the global economy, and when they retire and start asking for money to the state, money is nervous. In short, the “baby boomers” work, investment groups dominated era is coming to an end, instead, a Generation X, Generation X, Generation X, an American born from 1961 to 1971) work, investment groups dominated era, this change will lead to global capital crunch.

if Peter Zeihan no is wrong, so that we know of the venture capital will soon become a thing of the past. As the global investment capital large-scale shrink, companies will find it more and more difficult to finance, the venture capital as an industry will shrink accordingly. When the entire ecosystems are beginning to tighten their belts, silicon valley lost low-interest loans for working capital, began to cash-strapped, so there will be how a scene? Silicon valley survival crisis will meet? Let us imagine a cash-strapped what it’s like to be in silicon valley!

angels

the real angel investors to pay their own pocket money, do not need to raise money from outside. If their investment portfolio does not collapse, the impact should be smaller than other parties in the chain of investment. Because they do not depend on the limited partners, such as pension funds CalPERS and Wall Street money. Angel, however, depend on risk investment will seed and early advance to the next level, if there is no money for the second round of financing venture capital firms, the angel can fall.

secondary vc

second-tier companies may be a disaster. If the global investment money is tight, feel the pressure is likely to be the first of these companies, once they spent the money raised, probably will die completely. If you think A round crisis is already very bad, so just wait, wait until the entire venture capital, all the links are removed from the situation will be worse?

big line vc fund

risk investment as an industry will not disappear completely, blue-chip players is expected to have held firm. Their investment fund size may be smaller, however, will be more cautious. With the decrease in the number of peripheral companies participating in the investment, all added up to the total amount of investment of company will also reduce, even if a glimmer of companies still use a lot of money to maintain the turnover.

so now, let’s think about this for a wider range of silicon valley ecosystem in terms of what it means.

less money means less startup, unless technology entrepreneurs to find out the road to success, this is a very simple math – less company funded, means that the demand of choose and employ persons.

the surviving venture-capital firms might expect to see a benefit in the short term, are reluctant to take the time to wait for an uncertain event. This means that the investment into smaller, more short-term direction.

and all walks of life in other areas of the United States is different, the industry has a real profit support, to a large extent they can feed themselves. But most of the industry in silicon valley is established by venture capital support, once the vc what the faults, as happened in 2000-2001, so the whole valley will fall apart overnight.

if Zeihan about population statistics, and the influence of population on global capital supply forecast is correct, and then for the first time after the dotcom bubble situation is different, the vc industry in a few years I’m afraid I won’t rebound, so will lead to a more bone domino effect, that is what we desired dynamic economy will cease to exist in silicon valley.

I don’t know exactly, predict it will happen in the book. I just according to the author put forward the direction of the to do that, try to guess the valley will be what kind of impact. Although just speculate, however, demographic changes impact on the economy has been proved. If you are old enough, should also remember the golden age of Japan, in the late 1980 s, or the final glory, after that is the last 20 years of economic stagnation, through the example of Japan, I believe you have seen the population ageing caused havoc on the economy.

if Peter Zeihan is right, shrinking capital would actually happen, today’s silicon valley is likely to be like Japan in the 80 s, and we will enter a long and painful recession.

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