And yet, published in 1859, it perfectly describes these times of 2010: “it was the age of wisdom, it was the age of foolishness...the noisiest authorities insisted on being received, for good or for evil, in the superlative degree of comparison only.” Sounds like President Obama, to me. Or Goldman Sachs .
The best of times: Silicon Valley should be humming with new deals. A plethora of new product platforms beckons, ecosystems that should draw hordes of gleeful developers of new software apps, hardware gadgets and services. The new 4G Apple iPhone unveiled this week will inspire thousands of apps-designers; so will the ever-proliferating Google Android system, and Facebook with its 450 million reachable, registered members.
Yet it looks like the worst of times, and that owes to taxes—a ton of ’em. It threatens to damage venture investing and to derail a key source of job growth. And no one in Congress, in either party, seems intent on doing much of anything to stop it.
At first glance it looks like the venture-capital business is doing just fine. In the first quarter of 2010 VC’s did 681 deals worth $4.73 billion—up 41 percent in dollars from a year ago, when 635 deals were hatched.
But for the most recent 12-month period, total VC investing is down 36 percent from the year before, to $19 billion pumped into 2,900 deals. And that full-year total itself is less than one-fifth of the sum in the boom/bubble/bust year of 2000, when a massive $100 billion was invested in almost 8,000 deals. (Source: PricewaterhouseCoopers and the National Venture Capital Association.)
One reason: It’s far more difficult now for a startup to make it all the way to a stock offering. In 1994, a startup took less than five years to get to the IPO stage; that wait now lasts almost ten years, the venture trade group says.
In the 1990s a total of 1,776 VC-funded companies went public during the decade (56 percent of all venture startups). But in the “uh-oh” decade that began in 2000, only 392 IPOs occurred for VC startups—a mere 13 percent of the funded firms; the other 87 percent got bought by existing companies. The VC association blames burdensome regulations such as Sarbanes-Oxley and a dearth of bankers willing to handle tiny stock offerings of $50 million or less.