Posted by: John Tozzi on May 25, 2011
Silicon Valley Bank has clients from every part of the entrepreneurial ecosystem: startups; venture funds and angel investors; and large, mature tech companies. That gives Greg Becker, an 18-year veteran of the bank who became chief executive officer last month, a good vantage to evaluate all the money flowing into tech companies, from tiny app makers to Facebook and Zynga (the latter is said to be planning an IPO next month).
Becker is agnostic about whether there’s a tech bubble — when I asked him about it this morning, he said company valuations like LinkedIn’s $9 billion post-IPO market cap may or may not be overblown. (Silicon Valley Bank’s holding company last week sold a small stake of about 70,000 shares it had acquired in LinkedIn according to the LinkedIn prospectus.) What’s different this time, Becker says, is that “companies have better fundamentals.” Unlike many of the tech companies that went public in the late 1990s, he points to LinkedIn and its cohort — including Facebook, Twitter, Zynga, and Groupon — as businesses with real revenue.
The same is true for early-stage startups that angel and seed investors fawn over, Becker says. That’s in a large part because starting an Internet business costs a fraction of what it did in the 1990s. “You have companies today that are raising $500,000 or $750,000 that already have their first revenue streams, and in some cases are already profitable,” he says. That’s a sign that the money rushing into new ventures, from social media to mobile apps, may be more grounded in reality than it was in the first dot-com boom days.