Monday, June 05, 2006

VC's paying dotcom prices for tech and healthcare start-ups again - Oops!

The FT today looked at the price of early stage start-ups shooting up to levels not seen since 2000. Oops!

"Valuations of technology start-ups before investment have soared to their highest levels since the dotcom boom as venture capitalists seek to deploy large amounts of cash in search of the next big thing in the internet, telecommunications and healthcare sectors.

A study released on Monday found that the median value of a pre-investment start-up hit $18.6m in the first quarter, up $3m from last year. The figure is the highest since the fourth quarter of 2000, when the median value of a company before accepting venture capital funding topped out at $23m."

And we know what happened after the last early stage price bubble in 2000?! It makes you wonder whether the value of early stage tech and healthcare startups has gone up or whether VC's have got too much money again (and too little sense!).

Given what's going on in the stock markets currently and the recently ill-fated IPO of Vonage, the deal hungry VC's should move with greater caution. And consider shedding certain partners!

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