Interesting notes in a Business Week article - based on actual figures - on why we’re not in a Bubble even though there’s a lot of excitement over all things digital:
Not only are we not seeing the IPO frenzy of years gone by, we’re not seeing Web 2.0 IPOs, period. In 1999, a record 270 venture-backed companies went public for a combined $21 billion. They weren’t all dot-coms of course, but many were pumped up by the dot-com hype. Last year, 57 companies went public, for a total of $5.1 billion.
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Technological and market changes. In the U.S., almost 70% of adults are online, and almost half use high-speed connections. In 2000, about 40% were online. Plus, it costs dramatically less to do business, thanks to open source software and low-priced Dell servers.
Quick question: why the blatant Dell plug, by the way?
More than half of U.S. teens are using social networking sites, and 48 million Americans have posted content online.
Venture capitalists invested $850 million in Web 2.0 businesses in 2006. The tally has been doubling annually since 2002, but the median size of those deals was just $5 million and the median valuation was $6 million. Across all venture capital categories the median valuation was $18.5 million.
Now, compare that with the $34 billion in VC money invested industrywide. So-called clean-tech companies alone drew $1.28 billion, up from $664 million the year before. The median value for these companies was $7 million. The market for clean tech is huge, but in many cases the business models are hardly proven. And while it’s true that plenty of experimentation is happening online, and many social networking and social media businesses will not succeed, no one would question that billions of advertising dollars are headed online. Much of that revenue will fuel Web 2.0 growth plans.
In 2006, 336 venture-backed companies were purchased, netting $16 billion. In 2000, fewer such companies were acquired, but the 318 targets fetched $68 billion.
Read our previous post on pockets of bubbles maybe, but not outright bubble here.
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