March 29, 2016

Who has the biggest…Raise?

Venture Beat had an interesting article about Domo’s recent raise, Tableaus’s disappointing market guidance, and Slack raising $ to a possible $5 Billion valuation. The one thing I got out of all this is the following:

Beyond the money needed to invest in the business, one can begin to see that these crazy financing rounds maybe be as much about making a statement. If you’re making purchasing decisions and you glance around at a bunch of companies that each are only a few years old, you start to wonder which one might be around for the long haul.

Making a statement? Yes, it does make a statement but it sure sounds like a pissing match to me. It reminds me of Dot Com era and how eerily similar all these massive” raises are, how insane this market is right now.

Call me cynical but I don’t believe that this time it will be different. Sure VCs now invest in companies that actually show a revenue stream (something that wasn’t necessarily true during the Dot Com days) but you can still over pay” for something.

Only time will tell and the market will discount prices. There is so much pressure to preform that even just a small hiccup in future earnings guidance can slash market valuations. Just look at Tableau’s performance once reality caught up with it. It’s now trading below it’s IPO day opening price of $47.

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