Tech Startup Valuations Continue to Rise

More indications of a coming tech boom are showing up. Not so long ago, the angel or seed round would value a company at around $1-2M. With the rise of the SuperAngels and the Cambrian Explosion of interest in consumer Internet deals, seed round values have crept up to $3-4M, levels normally seen with traditional Series A rounds.

Now observers are noticing that they are jumping over the $4M line as well. Two recent deals received around $1M each at values above that $4M line. I know of a number of other financings above that line, but what is striking about these two deals is that they are getting done by newer entrants to this game:

• Hipmunk raised in a "hyper-competitive" round where a cluster of angels drove the values up; previously we had seen this sort of auction coming from traditional VCs after the seed round
• The Pulse iPad app (shown above) raised an angel round from four traditional VCs (Redpoint, Mayfield, Greycroft and Lightspeed), who followed the SuperAngel convention of an uncapped convertible note

Both may be one-off situations, particularly the gang of four VC stepping down to the angel level. Sometimes these types of investments make sense due to relationships and are not the start of a new trend. Nonetheless, it is clear the rapid rise of SuperAngels is disrupting the traditional VC business. 

Comments

[trendlines]

Shanghai Composite: The Tiger Leaps!

My last post, "Shanghai Composite: Crouching Tiger" suggested an impending breakout above 2700. Today, the Tiger took the leap on high volume (+ 3.13%). I have added some long positions with a stop just below 2700. The initial target of 2900 from my last post still stands, with a potential short-medium term target of 3100. Watch out for resistance from the descending trendline.

http://trendlines618.blogspot.com/2010/10/shanghai-composite-tiger-leaps.html

[Account Deleted]

S&P 500 before opening bell

[Wave Rust]

Politics don't matter?

traders are looking forward to the retirement of many of the looters in Congress. staying positive, or bullish until the week after the election is a given ,,,, even with a small correction in the next few days, and thats only a possibility.

look up the landmark 1894 midterm election. power switched in the most dramatic way in congress. repubs picked up 130 seat from the dems.

this election could easily rival that one.

as dirty harry might ask, "does that make you feel bearish? well, does it, punk?" :))

like i said, ''let's call april to august a 2 ,,,, and just move on.''

crash of '87 created the mega rally for 13 years. will you be left behind by the nano crash of 2010?

if you are tired of being wrong all the time, maybe you should change something ,,,, like, change you then your perspective.

ask yourself, "who were those idiots who bought in 1932, 1942, 1974, 1982, 1987, 1991, 2002, 2009?"

the answer is ,,,, the same lunatics that sold in 1929, 1937, 1966, august 1987, 1989, 2000, 2007.

you can't change the market but you can change yourself.

wave rust

[Jeff]

ask yourself, "who were those idiots who bought in 1932, 1942, 1974, 1982, 1987, 1991, 2002, 2009?"

the answer is ,,,, the same lunatics that sold in 1929, 1937, 1966, august 1987, 1989, 2000, 2007.

I'm not sure I'm following the point you're trying to make here because your post is a little confusing but if you're suggesting that now is the time to buy, you might want to look at the dates you just gave. If you had bought just a year or so after the crash in 1929, 1937, 1966, etc, (which many did) you would have endured a few more years of huge losses.

The crash of '09 is very similar to the crash of '29 or Japan's crash of '89 in that it was "credit-induced" and not a simple business-inventory contraction/recession. Credit-induced crashes like the world had in '29 and Japan had in '89 will last for years, not months because it takes years to pay off or write off the excessive debt. There is no magic cure for excess debt other than the same long-term pain we had in the 30s and Japan had in the 90s.

I'm a trader, not an investor and you can make money buying the market as a trader for short-term gains but any long-term investor who thinks we're in a new long-term bull market right now is going to learn the same hard lesson that many multi-millionaires who lost their fortunes by buying in 1930 learned.

And no, I don't subscribe to Prechter. I'm a no-longer-practicing CPA who knows the dangers of excessive debt and how long it takes to fix that type of problem...

[Roger D.]

The Dow right now is poking the underneath of the compact H&S pattern of Aprils top. The 11K area looks to be a double top area. Even if buyers do come in here, I think the possibility of a double top has to very high.

Roger D.

[Neo Tzu]

Selling some longs, we're close enough to my diametric target area of SPX 1168-1174.

I'm waiting to see how the 6-7 day cycle low due next week behaves

[vipul garg]

neo,
why would you start a trend after a 4 year cycle low with a diagonal triangle?

[Roger D.]

I'm not even going to attempt to call a top here, I 've learned that lesson. The JNK high yield is sporting a possible triple broadening top and if this market was going to run out of gas,this would be a good point to see if some big sellers make their appearence very soon.

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/cfc271e5-dc68-4bd9-a293-6fc33b45686c

[Neo Tzu]

neo,
why would you start a trend after a 4 year cycle low with a diagonal triangle?

That's where this new bull leg starts.

Leading diagonal triangles occur in wave 1 position of impulses.

[vipul garg]

neo,
there is zero possibility of any new bull leg starting with a leading diagonal in wave 1 position.
if there were a leading diagonal in wave 1 position of an impulse, it will be a terminal impulse and the wave 3 and wave 5 will be unable to break wave 1 's high.so it will be a market ready to really collapse depending on the degree where such a pattern is occuring.

[Neo Tzu]

why would you start a trend after a 4 year cycle low with a diagonal triangle?

Leading triangles also occur as A of a zig zag.

The most bearish case here would be that we are only in a zig zag off the July lows and the 4 year cycle hasnt hit yet

If October-November produce a crash slightly below the July 2010 lows, then thats the low of the 4 year cycle.

How late October plays out will be very interesting.........mini plunge similar to September 1986 would fit nicely here......get everyone terrified of stocks just before this monster bull market thats just ahead.

Theres also a huge Hurst cluster low due late October, so a mini crash definitely isnt out of the question.

[Dsquare]

New formation Neo?, bow-tie diametrics aren't complex waves.

[vipul garg]

neo,
you are looking at a daily time frame , a 4 year cycle and mini plunge like qtr of century back in 1986:these are all very different time frames.

wave A of a zigzag really cannot be a leading diagonal , since wabe B of a a zigzg retraces little of wave A.
so you are labeling wave A of a zigzag as a diagonal triangle followed by a reverse alternating triangle which retraces almost 80% of wave A but ends almost at 33% retracement and is followed by a diametric in wave C.
how do you propose such a structure?

[Roger D.]

The market is thrusting up here after a very long run, that to me is topping action. Also the TNX continues to make new lows and the BKX is flat today. Like I said if big sellers appear here that would not surprise me.

Roger D.

[Neo Tzu]

New formation?

Neely uses F-G-H-I, I personally use X-A-B-C because X better describes the violence of the wave and also A-B-C psychology still prevails. You'll see me using Neely discoveries, but I dont use F-G-H-I because I think X-A-B-C is better

One need not worry too much about label minutia or follow someone else 100%, develop your own style. Trading isnt being a member of the 16th Century Catholic Church. You can use anything you want to label waves, Greek letters, Sumerian numerals, pictures of animals etc....whatever is best for you.

If you want to adhere to strict Neely Church Liturgy and Orthodoxy, here is how he would probably label it...and todays rally appears to have negated the bowtie in what looks to be quite bearish ahead of the 6/7 day low.

[Neo Tzu]

wave A of a zigzag really cannot be a leading diagonal

Of course it can....it happened yesterday on the 5 minute chart...

[vipul garg]

neo,
5 minute chart.
you cant put wave labels on 5 minute chart.

[Neo Tzu]

neo, you cant put wave labels on 5 minute chart.

I really hope you are joking. :)

[Bird]

I, with all the pomp and ceremony I can possibly muster, HEREBY announce that the top is in as of today.

Promise.

I know my Gremlins are listening. They have been very active lately proving everything I think or do wrong. Its time to take them on.

[Wave Rust]

jeff,

"I'm not sure I'm following the point you're trying to make here because your post is a little confusing but if you're suggesting that now is the time to buy, you might want to look at the dates you just gave. If you had bought just a year or so after the crash in 1929, 1937, 1966, etc, (which many did) you would have endured a few more years of huge losses."

point is in the continuous stream of bullish comments i have made over time. while many have tried to fit and trim a bearish wave count to possibly the most bullish market ever, the smart money has bought and continues to buy.

the difference in views is that people tie their long, intermediate economy view to the same market timeframe. generally, I maintain that the worse the "news" AFTER THE LOW, the more bullish the market. especially in low volume atmosphere like today's.

I am a trader too, so when I'm short I know the mega risk is to the upside. So shorts are brief and quickly taken off, either in profit or in loss.

But, in spite of EW's inherent bullish nature, most people treat it as a way to "prove" some twisted correction structure lasting decades and decades.

though bears maintained their stance from '32 to '37 because of the economy, I sarcastically called the smart money in '32 as lunatics that essentially bought low and sold high in '37.

if the federal govt would just stop picking at the financial sore, take its foot off the neck of financial markets, the entrepreneurs (small and large) will resurrect the economy over time. heck, even the socialist governments in china, viet nam, brazil, etc. get it, understand it and have recovered quickly, while the oblahblah administration continues to burden the economy with heavier regulations from every corner of the federal govt.

my point is further made by the anti-control movement of tea party and the like.

I too understand the debt issues but the only way they are going to be "solved" is by less govt regs that have boiled credit markets, and put them away wet.

if the Fed could lend directly to consumers (I don't want that though), that looser credit would virtually eliminate the toxic mortgage backed securities crisis. global refi's would unwind those derivatives by definition. underwater/upside down mortgagees would be last to refi because they would see prices rising over time, and maybe get back to B/E in most areas. that would eventually provide relief for the formerly extremely overpriced regions like CA, FL, NV, AZ.

excessive debt does take time, whether personal, corporate or government. none will get fixed if the Fed govt keeps its power trip going with more and more grabs for control of every facet of the economy.

market economies fix themselves, and, free market economies fix themselves even faster. spendthrift govt's never fix their debt problems themselves. it takes the people rising up and changing the gov't that gets govt to change and fix the debt problem.

even the fools that put in Chavez have realized their error ,,,, and they don't have much of an educated population. So, they must have be demonstrating a measure of "Common Sense" (T. Paine) in the recent election.

Heck, even Castro is renouncing communist economics at the end of a life filled by oppression and genocide. best national products in Cuba are sugar and vintage '54 Fords.
--------

By your premise, of buying a year after the crashes, your assumption is wrong. I didnt say buy a year after a crash ,,, i say buy the crash low. BTW, the correction began early in early 2007 (look at weekly charts of various stocks), crashed in 2008, and then bottomed in 2009.

,,,, lows are especially easy to see with the most basic technical tools. tops are harder but breaking major trend lines is a very basic but effective way for investors to look at markets. With the flash crash low in place, there is now a major trend line under the market in place for long term investors. In a couple years, the trendline across tops will be useful since it will originate at the April '10 high. I'll bet the 2 trendlines form a huge expanding megaphone, which will usher in the recognition wave 3 because this is just wave 1.

you wrote, "but any long-term investor who thinks we're in a new long-term bull market right now is going to learn the same hard lesson that many multi-millionaires who lost their fortunes by buying in 1930 learned. "

it's still possible, but not likely the farther out in time we go. Look at monthly and weekly charts of NYA, Dow and SPX ,,,, compare those to the Naz's. Do the two sets even look remotely similar? IMO, not at all. the NYA/SPX/DOW have already "been there, done that" 1929-32 thing, and now, so has the NAZ's and the NIKKEI too.

thats why the naz's have led by percentages for most of the rally from march '09. the naz's retested the 2002 lows with a 88% retrace and a double bottom in '08 and '09. That's not a screaming BUY? then I don't know what is.

btw, japan has missmanaged their markets and economy for decades. but I think the NIK is bottoming or has bottomed. That was their extended version of 1929 to 1932.

investors in the US will be afraid to put money at risk for a few more years. thats just the way it has always been. they dont do their homework or learn anything about how to understand markets and make money.

i think i know about 90% of what matters to securities markets for my trading. So, my job is to look out for the other 10% that I'm wrong about, or miss. I'm wrong in trading often enough to never get too complacent or confident. and, I know what works for me. So, I tend to be right a very high percent of the time each day and each week.

parabolic rises and parabolic crashes happen all the time on the 1 minute charts. The way I see it, there's very little difference between the '87 crash, the flash crash and the mini drops intraday on sep. 30 and oct. 4th ,,, just another buying opportunity. pick your preferred entry strategy.

but thats all just my optimistic perception of my own 2D reality. :)

wave rust

in 2016, imo, the NAZ's will resemble a faster version of what happened to the Dow from '38 to '49. Naz traders gotta watch out for AAPL coughing up a hairball or being copied to death beginning next year.
I don't trade NAZ's ,,,, too 3D 4 me.

[vipul garg]

neo,
nobody can.
nobody shudnt.
there are no exceptions.

[Mamma Boom Boom]

Bird. Ouch!

[Bird]

I know Mamma.

[Bird]

Higher the better.

[Roger D.]

"I, with all the pomp and ceremony I can possibly muster, HEREBY announce that the top is in as of today.

Promise.

I know my Gremlins are listening. They have been very active lately proving everything I think or do wrong. Its time to take them on."

Bird, Monday is the day,bulls expect a ramp job to 1200 and us bears are wandering in the wilderness. It's nice too see that you some clarity.

It will crater on Monday. The forclosure boogeyman is out of his cage. A nationwide foreclosure moratorium is here.

Roger D.