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Asia Buzz: Comeback
A resuscitated NASDAQ is proving a bonanza
By ERIC ELLIS
August
24, 2000
Web posted at 1:30 p.m. Hong Kong time, 1:30 a.m. EDT
Got a good idea but think the NASDAQ's April tech wreck has thwarted your New Economy ambitions? Think again. There's more cash than ever before floating around to fund your Big Vision. It mightn't seem like that on the ground right now but that was the message delivered in Hong Kong this week.
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U.S.-based Jesse Reyes of Venture Economics, a business that monitors the ebbs and flows of the venture capital world, says new financing in the U.S. is expected to exceed more than $100 billion this year. Already some $70 billion had been raised to July, and that's just $10 billion short of the previous annual record set, naturally enough, last year.
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ASIAWEEK |
Intelligence
The story behind today's news from the editors of Asiaweek
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That was the year when the NASDAQ doubled and everyone -- but you -- seemed to be getting rich dancing the dotcom cha cha. This was also the year when the U.S. showed even Hong Kong a thing or two about IPO mania, where it was getting pretty commonplace to have companies' share prices multiply five times on opening day. The NASDAQ seems a little more sober these days, though the four months since the tech wreck have seen share prices of companies with real businesses, rather than just websites for yellow-bellied, red-crested warbler fanciers, resuscitate to vaguely near where they were in March.
That has meant that arriviste companies Ariba and Commere One that got hammered in April because they were dotcoms have since been screaming buys. They might have fallen 75%, but they have since come back almost to where they were -- a rise of 200-300% in some cases -- meaning that many Internet companies will likely be (again) among the world's best performing shares this year.
Returns like that make venture capitalists pant with excitement. The days of money growing on trees are over until the Next Big Thing. These days, money is still relatively arboreal, except the tree is more likely to be a bonsai than a redwood.
Reyes of Venture Economics noted there was waning interest in dotcoms, and more interest in companies that provide technological infrastructure -- the old story about Levi Strauss making more money selling jeans to California 49ers than the gold miners did striking it rich.
Reyes said that insurers, pension funds and endowments are committing more of their assets to venture capital endeavors. While these institutional investors have historically committed 3-5% of assets to such activities, they are sometimes now putting in 7%, he noted.
Or maybe it's because we've all seen that Cisco Systems-meets-the-United-Nations advertisement too many times on the box. You know the one that asks, rather too many times, "Are You Ready?" Ads like that tell us the Internet is very much a mainstream business phenom -- this week U.S. incubator CMGi dedicated the CMGi stadium in Boston where the New England Patriots football team play. How much more mainstream can you get than that? And if its mainstream, than means conservative investment institutions like pension funds want a piece of the techie pie, lest they be called by investors on their returns.
So, might be time to dust off that Big Idea and ask yourself, Are You Ready?
Eric Ellis is the Southeast Asia and Technology Editor of the regional
finance portal AsiaWise.com
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