Venture Capital Showing Life

Mixed IPO week: Nexsan, the next tech IPO, postponed today after a peer in the data storage field reported disappointing revenues and was downgraded. We have had just a few 2000-era venture-backed companies go public. More than getting out the '90s-era companies that somehow hung in there to become real businesses, getting these more recent venture-backed companies out will embolden the VC community, and loosen their purse strings. 

Today didn't help, and may exacerbate an odd trend in the VC industry: with the dearth of exits, the VC community has been bidding up the few rocket-ships that gain rapid market acceptance. A recent panel noted that a new breed of "capital efficient" funds have spawned a high percentage of attention-grabbing deals, and some of their deals are getting as much as a 4x mark up. One of the panelists, David Hornik of August Capital, says history proves some of these crazy valuations to be "smart in hindsight", such as buying into Facebook at a $500M value (Facebook has recently taken in capital at above a $14B value, and now claims it is worth $24B or somesuch). 

In a world of few exits, the handful of rocket ship startups get bid up. Unfortunately, Silicon Valley is not Lake Woebegone, where all "children" are above average. 

Still, the green shoots are sprouting. IPOs have trended up:

Most ventures exit via an acquisition, and there are glimmers of life in the m&a exits as well:

Hold the champagne, because prices paid for m&a remain low. They will tend not to rise until the IPO window pulls valuations up across the board. VC exits remain mired in a do-loop of few IPOs and low m&a prices. 

 

Nonetheless, with the rise of stocks in the Hope Rally, allocations to alternative investments have increased, and VC funds get their share: VC funding is on an uptick, raising fresh pools of capital after a terrible few years where many funds thought they were done.

Comments

[betterdays]

Where are all the Ewave shorts, are they getting water boarded with the market melt up ?????
But don't fret, if you still have a trading book the top is near..like less than 30 days

[KRG]

Vipul: Thanks for the explanation.

I find it quite interesting that as a staunch Neowave follower, using Neely's methods you had been bullish on the markets while Neely himself kept looking for the so far, elusive top

Cheers

[DG]

I find it quite interesting that as a staunch Neowave follower, using Neely's methods you had been bullish on the markets while Neely himself kept looking for the so far, elusive top

A "method" has to transcend even its inventor at some point.

[Wave Rust]

vipul/dg/others
aside from the steady trend to mathematical parity over time, what do you think will happen going out in time to the dow/dia, ndx/qqqq, rut/iwm, spx/spy?

they all look like this:

http://stockcharts.com/h-sc/ui?s=$RUT:IWM&p=D&yr=3&mn=0&dy=0&id=p71254337466

wave rust

fwiw, April 20 is a low if my structure view holds up.

[vipul garg]

KRG,
i guess in june of last year i was myself extremely puzzled to see what was going on , and the only possible explanation was that the low was in and something else other than what was being thought at that time was going on.

whats been neely's mistake esp. in trading has been not trade the longer term charts though his forecasting structure has been based on the same longer term charts.
also once one trades the kind of bear market we had and trades it well, it is extremely diffciult to trade the 'hold' kind of bull mkt or just buy on any sensible dip kinds. inspite of the many claims one may see all around,i dont see too many traders who have done that.

if one believes that the low is in , then the logical implication is that spx has to get to 1200-1300 zone atleast,with 1250 being the obvious target.

since you have great interest in longer term direction of the market, i can only say that i certainly believe that the low is in for spx and i hope alongside that it is in because breaking the lows will mean a tailspin for american economy atleast and for global economy perhaps that will take good part of my lifetime to come out.( and i am very young!)

[DG]

wave rust,

I'm not quite sure what your question is. ETFs are not perfect proxies for indices. In fact, Sentiment Trader has an indicator called ETF Liquidity or something similar, which measures the demand for ETFs relative to their underlying stocks, with his thesis being that when people would rather own the ETFs than the individual stocks, it is a sign of fear because the ETF is more liquid than the most illiquid X-number of stocks in the index. That's also why volume on ETFs is somewhat of a contrarian indicator. That said, they're good trading vehicles.

[Mamma Boom Boom]

>i certainly believe that the low is in for spx<

I don't think so.

It's getting very dark outside!