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Don't take Silicon Valley's pulse based on IPOs alone: GGV's Richards

Volatile markets and an uncertain economy have made it a chilly year for technology initial public offerings (IPOs).

Nevertheless, GGV managing partner Jeff Richards told CNBC that Silicon Valley is thriving, and next year will make up for 2016 in a "marquee" way.

"I think a lot of people are looking at next year as the year these companies come to the market," Richards told CNBC's "Fast Money Halftime Report" last week.

He pointed to Uber, AirBnB and Didi Chuxing, all private "unicorn" companies valued at more than $20 billion. "You've got a bunch of different companies that people really want to own."

So far this year, 31 companies have gone public in the U.S., down from 69 in the first five months of 2015 and 115 in the same period in 2014, Barron's reported, citing Renaissance Capital. Of public offerings in the first quarter of 2016, none of them were tech names, according to Renaissance.

All eyes are on Twilio, a communication platform that plans to start trading on the New York Stock Exchange in coming weeks. Richards called the upcoming IPO a great "litmus test" for the rest of Silicon Valley.

"It's a very well-run company, it's an enterprise software business that's had good growth," said Richards, whose firm has seen 26 IPOs across its portfolio. He said the valuation range was reasonable for a "good growth company in a good sector."

Signs of life

The merger market however, is not as sluggish. Microsoft's recent acquisition of LinkedIn was the latest positive sign in tech deals, Richards said. Microsoft announced it would buy the social business platform for $26.2 billion Monday, and as a result, LinkedIn's market capitalization soared as high as $36 billion.

Richards pointed to growth in internet users worldwide, and the continued proliferation of smartphones, as a good omen for tech.

"Today you've got 2 billion people on smart phones, all with a credit card linked to their account, they're all on social media, a lot of them are in China," said Richards, whose fund meets with more than 1,200 companies per year.

Richards' GGV raised $1.2 billion for a seed-stage fund, 80 percent of which they plan to invest in China, with a focus on software as a service (SaaS) and cloud technology.

Growth in China's "old" economy, namely commodities and manufacturing, has slowed but tech startups have managed to thrive, Richards said. The country has more than 300 million millennials, most of whom are using smart phones and helping to prop up companies like Alibaba and Baidu, he said.

"That's a demographic we all want to be selling products to," Richards said. "We don't see any signs of slowing growth in the tech economy in China."