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U.S. Tech Funding – What’s Going On?

a16z.com

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Re: U.S. Tech Funding – What’s Going On?

#121

Post by jseliger »

vasilipupkin wrote: post #77
ThomPete wrote: post #34

As I have mentioned in another thread. We don't have a tech bubble we have a Silicon Valley valuation bubble, one a16z is part of themselves. The discussion isn't whether tech companies are under or overvalued, they are most likely in general undervalued. The discussion is whether the kind of investments that companies like a16z and other VC companies make are over valued or even valuable. In other words, they are se…

they made a number of specific points about why they don't think it's a bubble. Now, they could be wrong, but at least they are coherent

they made a number of specific points about why they don't think it's a bubble. Now, they could be wrong, but at least they are coherent

This is a great comment. The grandparent is being pointlessly dismissive with zero evidence presented. That makes it an incredibly low-value comment.

Re: U.S. Tech Funding – What’s Going On?

#122

Post by javert »

Moshe_Silnorin wrote: post #92
javert wrote: post #88

Earlier quoted context omitted.

Yeah, but prediction markets are basically illegal, because---again---government regulation. Prediction markets are so vastly powerful, both as a financial tool (hedging) and an information tool, that people would be screaming bloody murder if we already had them and then they were taken away.

I agree, the way American government is now, I don't think there is much hope for the legalization of prediction markets. But new governments are formed from time to time and there are quite a few nations in the world so hopefully someone else legalizes them.

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

Re: U.S. Tech Funding – What’s Going On?

#123

Post by kenrikm »

bane wrote: post #98
GuiA wrote: post #94

Earlier quoted context omitted.

Yes, but you can sell info about people who have worn the sock to advertisers.

If you're not paying to wear the socks, you may be the product.

But the sock has revenues, even if it's a red sock that has no hope of turning black.

Re: U.S. Tech Funding – What’s Going On?

#124

Post by javajosh »

Animats wrote: post #117
thorfish wrote: post #3

"And the tech IPO is basically dead. The tech IPO market is at early 1980's volumes. For most of the 90's the majority of tech funding was public. This has reversed. It used to be routine to hit $20 million in revenues and go public. Not anymore." It's interesting how it seems that inequality is an unintended consequence of Sarbanes-Oxley. Before an engineer might vest after four or five years, just as the company is…

"It's interesting how it seems that inequality is an unintended consequence of Sarbanes-Oxley." No, it's a consequence of low interest rates. "Private equity" is mostly borrowed money. Think "leveraged buyout", not "all-cash deal". Here's a list of the top 10 private equity lenders for 2011.[1] #1 is Bank of America. Back in 2000, 1-year Treasury bills were paying around 5.11%. Today they're around 0.26%. Debt financ…

So the rich borrow cheaply, invest the money, and profit?

Re: U.S. Tech Funding – What’s Going On?

#125

Post by azernik »

javajosh wrote: post #124
Animats wrote: post #117

Earlier quoted context omitted.

"It's interesting how it seems that inequality is an unintended consequence of Sarbanes-Oxley." No, it's a consequence of low interest rates. "Private equity" is mostly borrowed money. Think "leveraged buyout", not "all-cash deal". Here's a list of the top 10 private equity lenders for 2011.[1] #1 is Bank of America. Back in 2000, 1-year Treasury bills were paying around 5.11%. Today they're around 0.26%. Debt financ…

So the rich borrow cheaply, invest the money, and profit?

Yyyyup.

Which, by the way, is the entire point of the Fed reducing interest rates - to stimulate growth by encouraging increased spending (including investment) of cheaply-borrowed money.

Re: U.S. Tech Funding – What’s Going On?

#127

Post by pbreit »

Animats wrote: post #117
thorfish wrote: post #3

"And the tech IPO is basically dead. The tech IPO market is at early 1980's volumes. For most of the 90's the majority of tech funding was public. This has reversed. It used to be routine to hit $20 million in revenues and go public. Not anymore." It's interesting how it seems that inequality is an unintended consequence of Sarbanes-Oxley. Before an engineer might vest after four or five years, just as the company is…

"It's interesting how it seems that inequality is an unintended consequence of Sarbanes-Oxley." No, it's a consequence of low interest rates. "Private equity" is mostly borrowed money. Think "leveraged buyout", not "all-cash deal". Here's a list of the top 10 private equity lenders for 2011.[1] #1 is Bank of America. Back in 2000, 1-year Treasury bills were paying around 5.11%. Today they're around 0.26%. Debt financ…

I don't think this is accurate. All the companies I know would rather go public in order to enable investors/employees/shareholders to get some liquidity (and for the company to gain credibility). The secondary market, while fulfilling this desire to some extent, is still not even close to what you get in an IPO. The onerous regulations are still clearly depressing the IPO market.

Re: U.S. Tech Funding – What’s Going On?

#128

Post by pbreit »

bane wrote: post #90
thorfish wrote: post #3

"And the tech IPO is basically dead. The tech IPO market is at early 1980's volumes. For most of the 90's the majority of tech funding was public. This has reversed. It used to be routine to hit $20 million in revenues and go public. Not anymore." It's interesting how it seems that inequality is an unintended consequence of Sarbanes-Oxley. Before an engineer might vest after four or five years, just as the company is…

I'd also add that until the public validation of an IPO and some time trading on the markets, tech companies have just become investment "tokens" that hold arbitrary amounts of wealth as "valuations" that make no meaningful sense. M&A efforts are simply capturing this fanciful valuation and hoping they can sell this token off in some way for more to somebody else. It's like putting $1 in a sock and under your mattres…

If you're able to sell a sock for $1m then, yes, it's worth $1m. But I strongly suspect that you could not. Which is why the analogy is flawed.

Re: U.S. Tech Funding – What’s Going On?

#129

Post by tomasien »

michaelvkpdx wrote: post #4

My takeaway- the VC's have leveraged the money from their successes to create a vortex that sucks in money from consumers, into privately owned companies, back into VC pockets, and back into more companies that get more people to spend more money. The tech vortex that is sucking away quality of life from the middle class and padding the billionaires (and large company) bank accounts. Throwing out a few bones on occas…

You're just describing capitalism.

Re: U.S. Tech Funding – What’s Going On?

#130

Post by _delirium »

bane wrote: post #90
thorfish wrote: post #3

"And the tech IPO is basically dead. The tech IPO market is at early 1980's volumes. For most of the 90's the majority of tech funding was public. This has reversed. It used to be routine to hit $20 million in revenues and go public. Not anymore." It's interesting how it seems that inequality is an unintended consequence of Sarbanes-Oxley. Before an engineer might vest after four or five years, just as the company is…

I'd also add that until the public validation of an IPO and some time trading on the markets, tech companies have just become investment "tokens" that hold arbitrary amounts of wealth as "valuations" that make no meaningful sense. M&A efforts are simply capturing this fanciful valuation and hoping they can sell this token off in some way for more to somebody else. It's like putting $1 in a sock and under your mattres…

I'm not sure public markets are a unique way of getting "real" prices. Private-equity sales are a real market with real money; if Google buys a company for $50m, that's an actual market transaction that valued the company at $50m. Is the idea that public markets provide better price discovery than private sales do? If so, is there empirical evidence that publicly traded companies really are more accurately valued than privately held companies are? (Genuine question; it's possible there is such evidence, but I haven't found a good article on the subject.)
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