More on Worry:
I worry about the sustainability of the junkies' fix provided by the '100% to 200% to 300% per year compounded-do-no-wrong-visionary-venture capitalists.'
What will they invest next year in technology start-ups? $30 billion (up from ~$24bn this year)? A solid slug of this cash will purchase silicon housed in steel/plastic/magnesium cases.
Is this really a sustainable situation? Will the VC's clients' returns continue? Why is there so much cash chasing these astronomical returns?
At the margin, are these endowments and pension funds that are funding @adVentures.com Fund MCMLV that bright? Or, are these the same lemmings who believed that commercial real estate 'had a lot more room to grow' in 1986?
Is this truly a virtuous cycle or is this just a bizarre situation where piles of free-flowing money are being inefficiently allocated into businesses where the actual returns have little-to-no chance at resembling expected returns?
I recall a comment on a conference call or two discussing the sustainability of the current SemiCap upturn. To paraphrase, this upturn is 'better' than the last because we are not seeing sovereign investment like we saw with Korea in the last cycle.
I would argue that it is not from whence the 'cheap (doesn't require returns per se)/dumb (doesn't understand risk or what realistic returns)' money comes, but rather that it is cheap and dumb money in the first place. The Kleiner Perkins, @ventures, Polaris folks are obviously brilliant. The money that they are raising, IMO, is considerably less so.
People throwing large amounts of money into the delicate, inventory-buffer-ladened, cyclical food chain of semiconductors (be they communications, PC, or automotive ICs) can only ultimately cause tremendous difficulties.
Perhaps, this time it will be different?
--Duker |
