The Money For Bubble 2.0

from the it's-all-here dept

A few months ago, a banker was telling me that he couldn't believe how many institutional investors were still pouring money into VC funds - despite the dismal returns out of those VC funds the past few years. While there had been some talk post-bubble about limited partners demanding money back from some of the billion dollar funds, the fact remained: those investors still needed some place to put their "risky" money. The only place they can find in venture capital. So, the money keeps on flowing into VC funds, and since few VCs were doing many deals over the past few years, it's been adding up to quite a lot. That "overhang" is now helping to fuel what some believe will be Bubble (and Bust) 2.0. Too much money chasing too few good ideas (with too few good people running too few good companies). Still, some of this talk just sounds like VCs who can't handle the competition, and don't like that the companies they fund might actually have to go out and prove themselves in the market, instead of having it wrapped up for them. At the same time, as we pointed out recently, some are realizing that bubbles have a long term benefit, even if they can be troublesome to those too closely involved. It really depends on your position and your time frame. If you're looking for new products, bubbles are probably a good thing. If you're investing in specific companies, however, it's much riskier.

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    data64, Mar 26th, 2004 @ 9:58am

    Do not completely get the point

    If you're looking for new products, bubbles are probably a good thing

    Could elaborate on this please. I am not sure I get the point you are trying to make with this statement.

    reply to this | link to this | view in thread ]

  2. icon
    Mike (profile), Mar 26th, 2004 @ 10:16am

    Re: Do not completely get the point

    More companies get funded, more risks are taken, more products get out on the market... Not all will survive. In fact, many will fail. However, because of all that money, more companies and products get developed.

    reply to this | link to this | view in thread ]

  3. identicon
    Charles W., Mar 26th, 2004 @ 10:32am

    Re: Do not completely get the point

    Basically what he is saying is that if you throw enough money at a problem it will be solved. This isn't good for the people doing the trowing(The VC folks) because they will most likely loose that money with no return. Once the problem is solved many people(you, and me) will benifit because of all the new technologies, and ideas that came out.

    -Charles W.

    reply to this | link to this | view in thread ]

  4. identicon
    Anonymous Coward, Mar 26th, 2004 @ 12:26pm

    Tell that to fund holders...

    .. whose fund managers get suckered by the VC's into buying the crap just before everyone comes to their senses.

    reply to this | link to this | view in thread ]

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