Red Herring chairman has warned that a tech bubble “is not coming yet,” at a state-of-the-industry address to delegates in California this week.
Vieux, who was hosting hundreds of industry CEOs, insiders and entrepreneurs at the Red Herring Top 100 Global event in Los Angeles, said that a flood of around $100 billion in venture capital was “dwarfing” Silicon Valley and changing the tech industry’s economics.
That meant three key scenarios, he continued: either there is too much money, money is being wasted or entrepreneurial fields are being globalized alongside so many markets across the world. Vieux pointed to Tencent’s investment in Snap this month as evidence that cross-boundary transactions are “exploding across the globe.”
Worldwide VC hovers above $50bn per quarter. But just 6% of its 5,000-7,000 deals involve seed capital, meaning that competition is rife among early stage companies. “There is nowhere to hide,” said Vieux. “Everywhere you go, there are a thousand startups.”
Other global trends include developments in regulation across key markets. Some include the loosening of laws, such as with cannabis and retail. But other industries, such as construction and–especially in the case of the EU–transport, could hold back progress for aspirant tech disruptors.
Emerging countries such India, Belarus, Estonia and others will reap the benefits of the rapidly globalizing economy, Vieux said, and their flourishing talent line will “make innovation chains tighter.” Infrastructure in these nations will be financed by private equity, as their ROIs far outstrip those in more developed markets.
Overall, Vieux concluded, there are plenty of reasons to be upbeat about the future of the tech industry, in America and across the world. But stock markets have not reached the heights of the early 2000s – yet. “2017 is a good year, solid, but not a banner year,” he said. “The bubble is not coming yet.”