Waiting For The Silicon Valley Space Bubble To Burst

Is Silicon Valley in Another Bubble . . . and What Could Burst It?, Vanity Fair

"And this is where it gets particularly murky. These are private companies, with private balance sheets, and the valuations they ascribe to themselves aren't vetted in the same way by the S.E.C. or public markets. These start-ups, in other words, can command much higher, and at times fabricated, valuations. One successful venture capitalist told me that he recently met with a unicorn [tech start-ups valued at $1 billion and upward] that was seeking a new round of funding. When he asked the C.E.O. why he had valued his company at $1 billion, he was told, "We need to be worth a billion dollars to be able to recruit new engineers. So we decided that was our valuation."

Keith's note: Silicon Valley is space business crazy right now. Everyone seems to want to have a space start-up and some of them are now buying out and devouring one another - based on hype, imaginary valuation, and the promises of space snake oil salesmen. There are smart people out there - with smart ideas and sound business plans. So far they seem to be the exception - not the rule. I have seen this movie before. Unless some actual products (with profits) emerge this bubble is bound to burst - regardless of whether Silicon Valley itself pops. As a friend of mine often says, this must have been what it was like when Rome was about to start burning.

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This page contains a single entry by Keith Cowing published on September 2, 2015 8:47 PM.

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