VCs cast doubt on dotcom era comparisons - AVCJ Forum

During a panel discussion at the AVCJ Forum in Hong Kong, Thomas Tsao, managing partner at Gobi Partners, said the key difference between today and the dotcom era was the size of the opportunity.

"I dont think it is a bubble," he said. "It is only a bubble if everyone is chasing the same trend, and I think as an industry we are staying ahead of the curve."

He noted that in China, big data is just one of a group of related industries including mobile, cloud computing and the internet-of-things, creating opportunities. "With advent of cloud and mobile you are entering the era of ambient technologies, which is the internet extending into the environment, " said Tsao. "When you look at it in that way the opportunities are much bigger."

David Yuan, partner and managing director with Redpoint Ventures, shared this view but added that there are still are some worrying side-effects to surging investment in the sector. 

"Companies are raising more money than they need, which is encouraging negative behavior," he said. "Also, companies that shouldn't get funded are getting funded, particularly with copycat start-ups, which places an even greater burden on good companies."

Scott Kupor, managing partner with Andreessen Horowitz, made similar observations regarding the US market in his keynote address to the AVCJ Forum. He stressed that the bubble analogy does not do justice to current trends, and risks oversimplifying what is happening today.

"There are two major trends in the US market that people should be concerned about, or at least paying attention to," he said. "First, the significant entry of new players into the private capital markets, and second, the billion-dollar-baby trend: around 90% of the largest venture capital rounds in history have happened in the last five years."

The difference today, said Kupor, is that value creation has shifted from the public markets to the private markets.

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