Speculating on the health of Silicon Vallley has been a recurring theme among Silicon Valley circles and media pundits for many months. It's clear to me that "we" indeed are back. The risk/reward balance among entreprenuers and VC's has definitely shifted decidely toward the risk side of the teeter totter...and that is healthy for the startup community, Silicon Valley, and small business growth.
The recent proof points that Silicon Valley is healthy again?....
1) E-commerce is back in a big way. Several startups have been funded recently and the buzz is back. Alibaba in China is the recent pinnacle of these valuations. Even the Kozmo founder is going back "all-in"
2) Online Advertising has risen from the dead and buried (thanks Google). Pure Play media companies valuations are trading both publicly and privately at 6x-10x Revenues and +25-40x EBITDA. About.com (+$400M), Then you have Baidu in China.
3) Acquisitions Galore: In the first half of 2005, media/interactive M&A transactions totaled +$8B vs +$2B in the first half of 2004 (think Intermix/MySpace, AskJeeves, DoubleClick, Shopping.com, etc). We hear of a new big M&A deal almost every other day (Skype, Siebel, Macromedia, now talk of AOL..). Ruperch Mudoch and Fox Interactive are out buying first asking questions later (Scout.com, Intermix, IGN combined $1.5B so far and counting)
4) The big players (Microsoft, Google, Yahoo) are gobbling up smaller companies as fast as they can (Keyhole, Picasa, Dialpad, Teleo, Flickr, Snapfish, Konfabulator, Urchin, Dodgeball, and we are hearing Technorati and Facebook are next).
And finally to put an exclamation point on this "bubbling crude" theme (the return of Silicon Valley), this week I was involved in 2 separate discussions with CEO's, VC's, and investment bankers in which I heard the following:
1) Roll Up Funding Strategies are alive and well in today's very active M&A market. Buy companies..roll them up....sell the whole package for more
2) B2B is the next big strategy shift now that "all things consumer" has had such success in the past few years. It's time to start selling products and services to businesses now.
Money and ideas are bubbling up...now the trick is whether we can refine them and into what "grade" (87, 89, Premium, or simply sludge)......
"...they said California is the place you oughta be so they packed up their bags and moved to the Valley.....Silicon that is.......stock option pools and internet stars"