Getting funded, the state of the market and sky high valuations were just a few of the topics discussed and debated as the Red Herring Top 100 North America conference began in Newport Beach this morning.
Opening the three-day event, Red Herring chairman Alex Vieux told the crowd of entrepreneurs, investors and industry experts that the technology sector is facing challenges spawned from the uncertain economic climate.
“Tech is facing a sober environment – in order for it to have succeed it needs to have a good economy and healthy economy. America is the only country that has a healthy economy,” Vieux said.
Talk soon turned to mega round of financing and how some investment round had far overtaken the amounts raised in IPOs. Private technology companies worth more than $1 billion, also known as unicorns, were also brought up. “The unicorns have created uncertainty,” said Vieux. “Everybody was saying if you’re not a unicorn I don’t want to invest, and now everyone is saying unicorns are bad.”
Valuations have also reached incredible levels. Gaurav Tewari, Executive Director at Citi Ventures said they are still returning to normal. “There was a period of time in February when they were looking quite good. It’s a mixed bag with valuations, they’re not as crazy as they used to be but there’s still room for normalization.”
The amount of money pouring into startups from the VC world was also called into question at the conference. Vieux said that with the technology IPO market almost completely dead, there will be many VCs left asking where their money went. He believes an uptake in mergers and acquisitions is the logical answer to this problem.
“We need to see trade sales more active. This is not a traditional market. My prediction is that we’re going to see a number of peer acquisitions. Because that’s the only way for them to survive that situation because they can’t go about it alone,” he said.
Attending entrepreneurs were also given advice on how to best raise funding. Audrey Jacobs, co-founder of OurCrowd told CEOs to follow three guide points. “If you don’t ask, you don’t get. Don’t take no for an answer, and if you’re not all in, get out,” she said.