It seems there are fewer and fewer things to invest in since valuations in almost anything are "high". Stocks? Got em. Bonds? Got em. Precious metals. Yeah, got those too. Collectables? No knowledge. So where can you put tons of money to work with good valuations? Tech (and fintech) startups. Yup, or as the author coins the new big money folks, "tourist investors" (nice) since they are all over the world and they either come to 'shop' for deals in brick and mortar (Silicon Valley) of just 'shop' online (platforms). Valuations? Come on, they're startups we can make up our own valuations (Wow, are these cheap. How lucky are we). Perhaps when the startups get attention the parties over??????? Nice read.
(Bill Taylor/CEO)
I'm taking you on a nostalgia trip. Remember the olden days (2016), when it seemed outlandish investments in technology startups were a thing of the faraway past (2015)?
Snap out of it.
Just look at the headlines of the past few weeks. China's on-demand ride king Didi Chuxing is considering a $6 billion investment backed by SoftBank. Airbnb finalized a $1 billion stock sale. Another $1 billion or more is flowing to Indian e-commerce firm Flipkart. Instacart put $400 milllion in its shopping basket. Google's corporate cousin Verily pulled in an $800 million investment.
I know we've all become inured to buckets of money sloshing around in Silicon Valley and other global technology capitals. But these are crazy large sums for young, private companies with unproven businesses.
The amount of financing flowing to startups dropped last year from a 2015 peak, but investments remain elevated compared with prior years...
Many of these startup financing deals share a common thread: the participation of investors who aren't the traditional venture-capital crowd. They're the new new new startup money.The post-2010 boom for tech startups was fueled in part by investors other than Sequoia Capital, Kleiner Perkins and similar firms that specialize in backing the next Google or Facebook. Some of these investors include banks' asset-management divisions, mutual funds such as T. Rowe Price, hedge funds and government-owned investment vehicles. No strangers to Silicon Valley, these startup investing "tourists" were around in the dotcom bubble days, too, but closed their checkbooks for a time when the party ended...."
Read Full Article at Bloomberg