Benchmark’s Bill Gurley says bust is coming.
AB Wire
A top venture capitalist has warned that the Silicon Valley is in the middle of a technology startup bubble.
Bill Gurley, who is a partner at the Menlo Park-based firm Benchmark, told MIT Technology Review that technology startups are overvalued and profits are underrated at the moment.
He has led Benchmark’s early investments in companies such as Uber, OpenTable and Zillow.
Gurley said that currently great entrepreneurs “are relatively disadvantaged” because “so much capital is available.” He added: “ In a market where capital is hard to come by, they can still raise money. In this market, they can raise a ton of money, but so can a lot of [less capable] competitors that wouldn’t be in business otherwise.”
This was not the first time Gurley, who once worked as a design engineer at Compaq, warned of a bubble. In an interview to Wall Street Journal last month, he said that the Valley was on a “dangerous path.”
“It’s my belief that Silicon Valley and the venture-backed businesses have moved into a world that is both speculative and unsustainable,” he told the paper. “And if we continue down that path, I think there’s going to be even more damage that’s caused.”