Wednesday, December 17, 2014

Throwing Money at Start-Ups in Frenzy to Find the Next Uber - NYTimes.com

Final paragraphs from a stark VC market dynamics reality check

"In this market, the crazy valuations are just the price of survival for venture capital firms. That’s how an online grocer like Instacart or WeWork can have billion-dollar valuations. These companies may have ideas that work, and if they do, the payoff is perhaps another Facebook. But more likely, everyone is overestimating market share and pushing assumptions to even get the privilege of investing.

So where does that leave us? It means that Uber may end up justifying its huge valuation. Certainly, a lucky few in Silicon Valley will make billions of dollars. But the same Ubernomics is being applied across the board. It is impossible that all, indeed most, of these companies will succeed. And in the failure of these companies, some venture capital firms will be brought down, except for the lucky few that actually catch a rising star."
Throwing Money at Start-Ups in Frenzy to Find the Next Uber - NYTimes.com
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