Nope, No Bubble Here: VCs Raised More Money In Q2 2008 Than A Year Earlier

Doesn't mean there isn't a bubble. It could mean it hasn't popped yet.

This makes sense if you consider the state of the primary asset classes. There's still money on the table, but where are investors going to put it? Real estate is a black hole, the stock market is a roller coaster in a downward spiral and private equity is dormant. Venture, while a longer term investment, is the only asset which is somewhat stable in this environment and the chances for an earn out from cash flush institutions such as MSFT, GOOG might actually happen.

Of course the start-up market could bottom out if/when cash dries up, but I've yet to see any material impact in the start-up world due to the current economy. However, trouble looms on the horizon for any ad supported business.

There are plenty of terrible companies that deserve to go out of business.

In response to T's comment:

Could you elaborate a little on you foreseeing trouble for any ad supported business?

Kaustubh,

If you look at the ad forecasts for all the major networks, they're down considerably. Historically, the ad market tanks in any down market (I don't think there's any question about whether or not this is a down market) The primary activities propping up the ad market this year is the election and the Olympics. Once the election is over, we can expect a drop in the ad spend in 2009. This is aligned with the recent forecasts by NBC, CBS and Viacom. When the aforementioned titans are struggling in this market, you can bet there's a trickle down effect to the start-ups.

Media agencies have continually revised their ad spend forecasts downward in recent months. Publicis, for example, has tweaked that number down twice in the past three months. I don't think they're done yet.

Also, look at the ad networks revenue. RightMedia is struggling to hit their domestic numbers, PubMatic has recently published numbers to corroborate the poor state of ad networks in this market.

It's going to be a bumpy ride for purely ad supported companies. If you've just raised money, manage it carefully, as I think we won't see a significant turnaround until Q4 '09 preceded by sluggish growth earlier in the year.

There has always been a bubble around the Ad market, but that is segment dependent.

The fact that Google is making more money overseas (the weak $ aside), while grabbing ever larger portion of the markets shows that the domestic Ad market is due for a correction, given a down turn or not.

Where does this leaves Facebook, Ning and Rock You valuations?

I saw a panel discussion where the so called Ad Market experts were predicting a golden age... The problem is that they own, or are paid by Ad Networks and all worked for and advise SEO. Those opinions are extremely biased. Ad agents advertising Ads is like PR companies promoting PR.

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640-802 Nope, No Bubble Here: VCs Raised More Money In Q2 2008 Than A Year Earlier Are you finished? Are you done with that! You dare?I want to challenge you?