Rest assured it’s more thoughtful speculation than reality. Speculation on Fred Wilson’s part, to be exact. In a recent blog post, he observed:
“I think the competition for ‘hot’ deals is making people crazy and I am seeing many more unnatural acts from investors happening. If it were just valuations rising quickly, I’d be a bit less concerned. But we are also seeing large deals ($5mm to $15mm) getting done in a few days with little or no due diligence. Investors are showing up at the first meeting with term sheets. I have never seen phases like this end nicely.”
Coming from Fred Wilson, such analysis may hold water in the wake of so much giddy news about how exciting NY tech is. However, a true cause for concern is the minor snowball Fred Wilson’s blog post has produced. Fellow VCs have latched on to the thread of Wilson’s thought and concurred. Another went even so far as to draw worrying comparisons to events in Florida, where a real estate bubble went poof years ago, with dire consequences.
The Florida connection came from Mark Suster, who wrote about it on is blog. According to Suster:
“The dinner parties now are filled with self-righteous angel investors bragging about how many deals they are in on. They have marked-up paper gains propped up by an over excited venture capital market that has validated their investments. For now.”
But as with all speculation on weighty matters and trends, it’s mostly noxious gas until something bad happens. Still, tech remains an exciting place at the moment. No wonder there’s so much srambling for a piece of the action.