04 June 2014

There is no Bubble in Venture Capital for Tech Firms.

In 2010

Mortgage financing is 647X as much as what we plow into tech startups. Outstanding consumer credit is 147X as much as the VC community puts into technology startups.

Since the start of the year, Facebook has spent more than $21 billion acquiring startups and Google has spent $4 billion. That's $25 billion in acquisitions for just two of the more prominent names in tech in just the first 5 months of this year. Meanwhile, VCs put only $24 billion into startups all of last year.

My own sense is that the venture capital market is still far from mature, perhaps where consumer credit was in the 1970s when the modern credit card was just emerging. 

There is a question about whether Venture Capital is fueling another bubble, akin to 2000. Based on this data, I don't think so. Not even close. It seems to me - given the importance and potential of new ventures - the ratio of financing for new ventures is - if anything - too low compared to mortgages and consumer credit. In a decade we might find talk of bubble in 2014 comical.

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