What’s Going on With All the Sky-High Valuations?

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Nov. 22 (Bloomberg) –- Bloomberg Contributing Editor Paul Kedrosky discusses the risks of rapid tech growth. He speaks with Jon Erlichman on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

A lot of companies were chattering so much.

This is netscape going public after months of being founded.

This year is going close to 100% year-over-year.

Taking money at allegedly $1 billion.

That is not far off from -- there is a notion because a company is private it should be cheap is child this.

People want candy and are not getting it.

What about when you go out and look for investments?

That is part of what you do.

Seeing any stuff that you want to invest in?

Are there more pitches where you are like, really?

Compared to the ones that are more legitimate?

[laughter] that is always the case.

There's nothing new.

I will see about 1000 pages a year, give or take.

-- pitches a year, give or take.

Oh my goodness.

The thing that worries me more than bad pitches is bad investment.

There are bad terms.

There is a survey where they look that terms in venture capital financing in the last quarter.

The thing that struck me is a little worrisome.

The terms are about as entrepreneur friendly as we have seen dating back to 1992. that dealt with technical stuff like liquidation preferences.

How much of the subsequent return they get -- in that kind of stuff is the beginning of saying something worrisome.

It is less about valuation than it is about investors be tailwagging lee overeager -- tell lagging -- tail wagging earer.

-- eager.

Is that why it is easy for companies to sate thank you, but no thanks to that facebook's of the world?

There are other people who would pay this money.

I do not have to go public.

That is an option.

They do not have to take mark zuckerberg's money.

There is the other problem where people do not want facebook money.

I think i would rather have someone else's money from another company.

Being inside the facebook is not as excited -- not as exciting.

That becomes a more typical sale to make -- difficult sale to make.

I still expect snapchat to be acquired, but not at that price.

What would have to happen for you to feel like aims were getting out of control?

-- things were getting out of control?

I have no doubt that the underwriters will try to do that . if they see that, they will run.

Until then, i'm not worried.

Investors have a good handle.

When we see the opposite, we should run and hide.

Bloomberg contributing

This text has been automatically generated. It may not be 100% accurate.


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