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Cash rains down on US start-ups

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SAN FRANCISCO (AP) — Cash rained down on start-ups in 2014, as venture capitalists poured a whopping US$48.3 billion into new US companies — levels not seen since before the dot-com bubble burst in 2001. Strong technology IPOs are luring investors chasing the next big return, but with valuations this high, critics suggest some investors may be setting themselves up for a major fall.

“It’s not that many businesses aren’t viable, but the question is, what are you paying for them?” said Mark Cannice, a professor of entrepreneurship at the University of San Francisco.

Venture funding surged more than 60 per cent in 2014 from the prior year, most often fuelling software and biotechnology companies, according to a new MoneyTree Report issued by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters. But the money wasn’t spread around to buoy many more companies. A few just got huge piles of cash.

Published in the Observer
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