It The Tech Bubble About to Burst, Again?
It is the year 2000. Nina Brink, CEO of internet provider World Online, gives everyone a thumbs up after a successfull IPO of the company. It wouldn’t last. Despite a strikingly ‘active’ ABN Amro soon thereafter the stock plunged. The damage to the investors was estimated at 2.3 billion Euro.
Although 12.000 investors were compensated, following a 110 million euro claim settlement, this event marked the burst of the internet bubble. Many would argue that the bubble was to burst regardless of World Online. Nevertheless, it happened and it took much of us by surprise.
But it should not have been a surprise. Two years prior to the dot-com boom the number of tech-related IPOs had dropped dramatically. Bad IPOs scared off investors from showing interest in new dot-com IPOs and as a consequence blocked the way out for VCs, the majority of the investors in the technology sector. While the amount of risk capital had already dried up in Silicon Valley and Silicon Alley, World Online took advantage of European investors that were unaware of the events taking place in the US and swiftly took their last opportunity to hit a homerun. Nina’s thumbs up were also directed at the working class people that invested their pensions and savingsaccounts. And lost.
It is 2016. After the peak in 2014 the number of IPOs has dropped dramatically. Some of the tech IPOs weren’t as successfull as prospected. Closing the backdoors for VCs. Financing for startups fell 29% in the fourth quarter of 2015 from the third quarter, and it dropped another 8% for the first three months of this year. Startups began scrambling to get their finances in order. Layoffsmounted, perks vanished. For consumers,prices started to rise.
So the big question is: Is the current tech bubble about to burst once more?