Demystifying the Tech Startup Bubble

DEMYSTIFYING THE TECH STARTUP BUBBLE With IPO flops and billion dollar tech acquisitions, many experts are debating the existence of a tech startup bubble. Is it real? What is a tech startup bubble? AN INVESTING PHENOMENON An obvious, but unsustainable, market rise from increased speculation in tech stocks Investors predicting big ROI opportunities Heightened tech company valuations and acquisitions Unproven tech companies going public, capitalizing on Demand not met, and Rapid share price growth from hype bubble pops over-valued demand *POP* $3.7 Dot.com Technology Bubble 1994-2002 TRILLIONS OF $) HYPERINFLATION Total NASDAQ market value DISSIPATION $2.6 NORMAL FORMATION OVERSHOOT NORMAL $1.5 $0.94 $1.1 Historical Trend $0.40 6 YEARS UP 2 YEARS DOWN 1990 1995 2000 2005 1. Source of funds: Venture Capital 2. Emergence of www 3. Founding of Amazon.com 4. Founding of Google 5. Sales tax moratorium on e-commerce passed by Congress 1990 - 2000 marked 140% annual growth rates TECHNOLOGY VALUE DEFLATED 70% Zenith in 2000 2 years later IPOS dwindled from 457 to 76 between 1999-2001 IT companies represented 1/4th of all equity value in the world DotCom bust was a result of “too much, too fast." RAISED $82.5 MILLION IN AN IPO IN FEBRUARY 2000 Pets.com $1 Due to high shipping costs and low demand, they lost COLLAPSED 9 months later Amazon.com-backed money on most orders PER SHARE WORTH $0.19 PER SHARE DOTCOM BUBBLE 2.0? Why some people claim there is a tech startup bubble today 3 out of 4 of venture-backed startups don't return investors' capital 95% of startups don't meet their projected return on investment (ROI) revenue growth Average "successful" startup $25.3 M/$196.8M 00000000000e0000 REVENUE RAISED IN $ 000000000e0000e 0000000000000000 INSTAGRAM $286 M/$1B SOLD / VALUED AT IN $ O = $10 MILLION 00000000ee0e TUMBLR $125.25 M/$1.1B = $1 BILLION ZYNGA $1B/$7B Trading Debut $10 TODAY 55% DECREASE IN VALUATION per share: 3rd largest IPO in history FACEBOOK $16B/$104.2B Trading Debut $38 3 weeks later $28 > 1 YEAR LATER LOST 31% OF IT'S INITIAL VALUE per share The volatile industry has settled BUILDING UPON EXISTING TECHNOLOGY ARE SAFER INVESTMENTS THAN IDEAS JUST COMING OFF THE GROUND During a recession there's a stronger case that money's been too tight, instead of too loose in the market. bizbrain.org Presented by: Sources: http://www.crunchbase.com http://www.inwestopedia.com http://www.cnbc.com/id/100686505 http://www.sfbg.com/2013/04/02/tech-bubble-20 http://techcrunch.com/2012/01/03/crunchbaseexits/ http://slashdot.org/topic/bi/does-yahoos-summly-buy-signal-a-tech-bubble/ http://www.huffingtonpost.com/2013/05/20/yahoo-tumblr-valuation_n_3307198.html http://www.huffingtonpost.com/john-friedman/real-estate-bubble_b_2745173.html http://www.ft.com/intl/cms/s/0/d215a3b6-ec43-11el-a91c-00144feab49a.html http://readwrite.com/2011/07/14/3-myths-of-the-startup-bubble http://www.honeytreeholdings.com/is-the-startup-bubble-bursting/ http://venturebeat.com/2012/04/17/are-we-in-a-startup-bubble/ http://venturebeat.com/2012/04/17/are-we-in-a-startup-bubble/iv2lulFyacORIWo7T.99 http://www.theatlanticwire.com/technology/2013/01/2012-year-tech-bubble-numbers/60517/ http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-rupert-murdoch-facebook-myspace-20130517,0,7386543.story http://www.businessinsider.com/why-there-is-no-tech-bubble-2012-5 http://usatoday30.usatoday.com/money/perfi/stocks/story/2012-05-17/facebook-trading/55056312/1 http://online.wsj.com/article/SB10000872396390443720204578004980476429190.html http://housingstory.net/2010/08/19/the-five-stages-of-america's-housing-bubble/ http://www.brilliantforge.com/2012/03/08/tip-for-startup-founders-it-isnt-1999/#.UZ-FIKUKU60 http://www.cnet.com/1990-11136_1-6278387-1.html DEVELOPED BY N NOWSOURCING