Tags: dot-com | bubble | party | Backus

Venture Capitalist Backus: The Partying Is Like It's 1996

Wednesday, 27 Nov 2013 03:09 PM

By Dan Weil

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Speculation abounds in financial markets that the technology sector has turned into a bubble, just like it did in 1999.

But John Backus, a founding partner with venture capital firm New Atlantic Ventures, says the naysayers have their date wrong. Now is really more like 1996, when tech began to hit high gear, he tells The New York Times.

After years of sluggishness for venture capital after the 2000 dot-com bust, things are looking up again.

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Venture capital funding jumped 17 percent in the third quarter from a year earlier, according to The Times. "I think this is the best time we’ve seen since 1999 to be a venture capitalist," Backus said. He anticipates a recovery in venture capital returns this year.

“Everyone talks about the mega win, who was in Facebook, Twitter, Pinterest,” Backus said. “But the bread and butter of venture firms is not those multi-billion exits but the $200 million deals, and there are a lot of those.”

If the venture capital industry suddenly raises $100 billion, there's a problem, Backus says.
"But I don’t know how you can stop that. The greed factor kicks in."

Drew Nordlicht, managing director at money management firm HighTower Advisors, sees several contrasts between now and 2000 that indicate we aren't in a bubble.

"In 2000, people said the [dot-com boom] was on par with the Industrial Revolution. We were going to be living in one of those sci-fi movies," he told CNN Money. "We don't have that level of a mass fever pitch today."

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