El Nino brought rain, the Denver Broncos won the Super Bowl, and San Francisco has become super-expensive…
And yet, the City and the Valley have not changed that much. Business is still being transacted at a torrid pace, even tough the NASDAQ is now at 4283 (a drop of close to 17% since Dec. 29th). There were no IPOs in the US at all in January, but the Silicon Valley Tech Machine is undaunted – for the moment.
No one here sees a crash coming or a bubble bursting – yet. Sure, venture investing has gone down 20% or so in the last quarter of 2015, but California investors only see this as a healthy correction. Things were getting a little out of hand and market forces are coming back to play and bring some reason to bear.
The going rate for young software engineers is $ 150k, without counting signing bonuses and other perks. The fancy restaurants in Palo Alto are tough to get in, with 20-somethings throwing their easily earned dollars around. The cheapest one-bedroom apartment (really a dump) goes for $ 3000 a month.
And Angels still invest – the preferred tool is a convertible note with a 20% discount (the whole document is 2 pages). The Coffee shops and bars are full of entrepreneurs pitching and accelerators like Plug and Play in Sunnyvale are bursting at the seams. Speaking of which, P&P will announce a new European location (rumored to be London or Paris) within weeks.
Investment Bankers continue to fine tune their PowerPoint presentations, while the lawyers finalize domestic and international M&A deals by the dozen. For the moment, with the exception of IPOs, all lights are still set to “Green”. Let’s all hope that it stays that way.
What does it mean for Europe? The European Tech-Scene is steadily moving forward in peoples’ perception here. Laughed off 3-4 years ago, more and more articles are written about the European Venture scene and why it makes sense to invest there now. While the odds of landing a US investor as a European-based company are still small, they are getting better.
Don’t forget about the East Coast, though and especially Boston. Local accelerator Mass Challenge just announced the opening of a Geneva branch, which will provide the full service program that it pioneered here in Boston. More remarkably, it does so without taking any equity. Definitely a great deal.