Hot tech startups may face a long and bumpy fall
Venture capitalists fret about whether stock market rout would cool heady market for shares of private companies
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AS stock markets have tumbled, public company shareholders were not the only ones wondering what would become of their portfolios. Venture capitalists also began fretting about whether the plunge - which resulted last week in the worst week for US stocks since 2011 and a renewed sell-off on Monday - would cool the heady market for shares of private companies, especially in Silicon Valley.
There is reason to worry: The number of startups valued at US$1 billion or more has jumped to at least 131, up from less than a dozen in 2010, according to the research firm CB Insights. The total amount of venture money invested has also more than doubled, to US$50 billion in 2014, from US$23 billion in 2010, with venture funding in the second quarter exceeding US$17 billion for the first time since the end of 2000, according to the National Venture Capital Association. All of that froth has some wondering if it's time for Silicon Valley's heat to cool off.
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