The U.S. economy hasn't officially emerged from recession, but some observers fear a new bubble is already inflating in the venture capital industry.
Companies with the word "social" in their mission statement - better still "social" and "mobile" - have sparked a frenzy among early-stage investors. The rush to plug cash into the hottest startups has propelled investments into nine figures and valuations into billion dollar territory, on math that often has more to do with promise than profits.
"The pricing just gets crazy," said Pete Bodine, managing director of Allegis Capital, a Palo Alto venture capital firm. "You're almost worth more before you've proven out your model. That's usually one of the early indicators of a bubble."
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Author: James Temple
