Findory’s Greg Linden has a pessimistic outlook for 2008:
We will see a dot-com crash in 2008. It will be more prolonged and deeper than the crash of 2000.
crash will be driven by a recession and prolonged slow growth in the
US. Global investment capital will flee to quality, ending the
speculative dumping of cash on Web 2.0 startups.
In general, I am not terribly optimistic about 2008 from a macro perspective, either. I do think that there will be a tightening in global liquidity and that will dampen the VC enthusiasm somewhat. However, I don’t think the result will be a 2000-like crash.
First, I am seeing much less speculative trading in the public markets.
Second, the capital raised by startups is much more in line with the investment requirements of the ventures. In 2000, we saw rounds being raised for the sake of raising them. There was much talk of a paradigm shift. In 2008, valuations seem to be more grounded in economic reality.
Third, at least in developed markets, the advertising revenue model is real. In 2000, there were biz dev deals but little real cash from real companies coming in as revenue to internet companies. In 2008, we have Google booking $15b and Yahoo booking $7b in revenues. That is real income and the internet is now a real sector.
I stick with my call that there will not be a major dot com crash in 2008.