With almost any financial transaction, there are ways to bet both sides. With this one, you get in as an entrepreneur - you do a VC round, you tell Google Facebook made you an offer. Now is the time. Next year Google might be happy to let people go to Facebook.
With stock market bubbles, it's selling short. With the real estate bubble, it was buying default swaps against the mortgage bonds.
As VC is by definition a private market, it's much harder to short; instead, if it's overheated, you need to be selling assets into it (which is what taking a VC round is), assets you have to be creating.
If you wait for the bubble to burst (and it is a bubble), you might be locked out for years.
I have heard explicitly that angel, private equity and bridge financing deals have dried up.
I figured this was a pure valley bubble but if Fred is encountering the same things - why on earth can't I find even a subset of that? My network is not THAT terrible...
and i did get a haircut yesterday :)
To me this isn't a warning, it's an opportunity - now is the time, we are almost at the peak of the bubble, get in now. (Get in on the entrepreneurial side where values are high; get out on the VC side where values are low - but I'm on the former side))
There is a lot of money floating around in the US economy right now courtesy of Quantitative Easing. Yields on most asset classes (especially safe ones) are low, and the stock market is lackluster... so it wouldn't surprise me to hear a lot of money is flowing into the entrepreneurial side of the economy - isn't that about the best possible outcome?
I don't see this bubble bursting as hard. Most companies involved (Google, at least) have solid incomes, and are not running on hopes, dreams and borrowed money. VCs might find they paid too much, and Google might wind up with a slightly too expensive (but quite possibly rationally priced) employee base.
But a VC that paid too much gets a haircut, the fund gives bad returns... so what? New funds spring up. It is not that bad.