TREND-SPOTTING

China's Tech Momentum:

How Fast, How Far

Going Global, Investing in  

US Tech Startups

Silicon Dragon's FORBES Column

Today's Tech Momentum Differs from 1.0 Tech Bubble - and Won't Stop Soon

Tech bubble, tech momentum, tech revolution - no matter what you call it, all signals point upward at least for now. How long will this cycle last? How sustainable is it? How's it different from the dotcom bubble of a decade ago?

These questions are being explored by leaders in the tech innovation ecosystem. Unlike the dotcoms of yesterdays, it's increasingly clear that today's startups are being built on healthier fundamentals and typically, more solid business ideas are getting funded or acquired.

The premise of all boats rising and continuing to rise for perhaps another decade is being touted as far different from the 1.0 era when the Internet was young. Today, tech spans out to touch just about every field and the mobile Internet is where it's at.

Venture capitalist Hussein Kanji of Hoxton Ventures calls the current market activity a "tech momentum," not a tech bubble. See Silicon Dragon London video. He points out that this momentum is being driven by private equity investors who are buying into assets that they can sell at a higher sticker price later on. One example is Snapchat, which Alibaba just financed in a $16 billion round of investment, up from $10 billion in the prior financing.

This tech momentum is centered in the private equity markets, not the public markets, although it's clear that big publicly traders winners exits, Facebook and LinkedIn to name two.   

Last year, more than $39 billion poured into VC-backed private companies compared with $5 billion raised by VC-backed IPOs, according to CB Insights. The trend continued through the first quarter of 2015 for venture-financed tech companies, with $9.8 billion in venture capital funding contrasted with $250 million in IPOs.

The pool of money for privately held tech startups is increasing as new corporate investors from Asia such as Alibaba, Rakuten and Tencent enter the scene. Venture capitalist Marc Suster of Upfront VC notes that these newcomers are competing with traditional venture investors, and are driving up valuations the highest for late-stage investing in more mature tech startups. 

Read more of the Forbes post here: Tech Momentum.