Do the $450 million billion private financing of Facebook and the staggering $950 million for Groupon indicate the threat of a new dot-com bubble? Or is it different this time, with investors looking at revenue and profit, rather than just raw user numbers?
In light of thee monster investments – valuing Facebook at a whooping $59 billion and Groupon at $15 billion – and pending mega-IPOs for the likes of LinkedIn (upwards of $2 billion?), John Battelle posts an interesting analysis of the current situation on his Searchblog site.
“I’d like to point out a couple pretty obvious differences between the dot com busts of a decade ago, and the companies that are now earning billion dollar valuations. To wit: Each of the companies earning these valuations have revenues in the hundreds of millions or more, and operating profits in the tens of millions, if not more.
Most also have operating histories of many years, and/or executives and boards who have extensive histories operating in the Internet economy.”
He adds that the markets overall have changed dramatically, on many different fronts:
“First of all, nearly every consumer in the developed world is comfortable spending money using the web. Second, the web is firmly a mobile medium, enabling business models that were mere dreams a decade ago. And third, the markets have been mostly closed to public investment in the "Internet thesis" for most of the past ten years, so there is a very strong pent up demand.”
So, not the same as the first generation of Internet startups in the late 1990s then? Today’s dot-coms have real metrics and deserve the investor attention. And as for the level of the valuations, Google went public in 2004 at a $36 billion valuation, and now has a market capitalisation of £200 billion.
Via John Battelle’s Searchblog
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