Venturebeat published an interesting survey this morning which found that 42% of the tech CEOs they interviewed see evidence of a bubble. The infographic above shows the companies they are most worried about.
The market is definitely hot right now, but in the UK at least it doesn’t feel like it did in 1999, nothing like. That said, entrepreneurs and early stage investors should keep in mind that current conditions are unlikely to persist indefinitely. It’s more likely that there will be a period of meaningful market downturn at some point in their 7-10 year journey. Some will get lucky and exit much faster than that, but it is unwise to plan for luck. Better then, to keep touch with the fundamentals of building something that people love and that has attractive economics.
The very best companies combine great fundamentals with rocket ship growth, and we all want to be part of those stories, but the difficult situation that arises in current markets is investors offering big rounds before the fundamentals are sorted. Taking the money buys more time to get things working but brings with it the risk of increasing the burn, losing flexibility and running out of money if the fundamentals don’t improve according to plan. Sometimes it’s better to raise a smaller round, stay flexible, and then go for the big round when everything is ready.