My Bubblevaluation

Bubbles, unicorns, massive new funding rounds, that's all you hear of in the news these days. Even if you stay off the news to avoid all the bubble talk, you can't. It's usually on the front page of the site of your browser's homepage. Too much negative bubble talk and even bigger funding round news following it up, about the next startup to have "unicorn" status or potential raising a million dollars (or add some zeroes, matter of fact, add two zeroes) from some VC firm made up of dumb money, or smart money. you can't really tell the difference these days.

Yes there is a bubble, because you can find a startup for almost anything imaginable that has raised millions of dollars, and worse, there is still too much VC money chasing these startups. It's difficult to raise $50,000. Extremely difficult. Try raising $1,000,000 and booom, you've been funded.

On what grounds am I making these claims though? Sentiment and hear-say. I told a founder friend that I needed to raise $50,000 to test a new mobile media idea and he said, "well, I don't know about that, there are many VCs that would give you a million dollars but I can't think of anyone that is willing to do a small round like that." And, yes, he has raised around $2 million for his niche social networking startup.

About sentiment, I really do feel there's a bubble. And so does every other person who's screaming there is a bubble and it is going to burst. Yeah, some back up their sentiment with some data and they look convincing.

A few years back I did a lot of bubble reading, I read about the canal mania, railway mania, the great crash and the housing collapse. And even though I didn't witness the dotcom bubble, I remember what it was like in 1999 and 2000. I remember Boo.com dying and resurrecting and then finally getting the silver bullet, I remember those Nortel Networks adverts with songs from the Beetles which they must have paid a fortune for the royalties of, and last but not the least, I remember the AOL Time Warner merger, a desperate move by Time Warner to get in on it. Whenever people and companies start feeling they've missed out if they don't get in on something, it's probably a bubble.

There's too much influx of money into startups, Crunchbase sometimes captures more than a billion dollars of funding in a day. Every money bag is shoving cash into the next startup that hails manicurists. That is definitely another red flag. There's probably more money than value in these startups. Valuation is not equal to value.

New ways of making and spending money go along with bubbles. Tulipmania, the roaring 20s that lead to the great crash and the depression. Vanity. Yes there's too much of it. But I don't want to go on record screaming bubble yet. We could see this last through the year and even 2016. May the smart ones eat the dumb and weak while coming out of it.