Startup Valuations Cut - Zomato Casualty
Seems like Zomato's valuation has been cut today by 50% after Flipkart taking a 40% hair cut.
Doesn't this indicate something terribly wrong with the venture capital system of fund, hype, fund more, hype more hoping some day all will be fine. Paper returns I guess
http://gadgets.ndtv.com/internet/news/zomatos-1-billion-valuation-halved-ceo-says-hsbc-doesnt-understand-the-space-835441?pfrom=home-topstories more
Doesn't this indicate something terribly wrong with the venture capital system of fund, hype, fund more, hype more hoping some day all will be fine. Paper returns I guess
http://gadgets.ndtv.com/internet/news/zomatos-1-billion-valuation-halved-ceo-says-hsbc-doesnt-understand-the-space-835441?pfrom=home-topstories more
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Yes, you are correct. Its like the stock market where brokers push the price high and then fools like us buy at that price and those smarties start to sell!!! So, each VC creates so much hype that the other VCs feel left out and then they become desperate to buy into Flipkarts, Zomato etc!! more
May 10
Thanks Shikha for an interesting post! I am equally puzzled too. To begin with I think this business of valuation is indeed bovine secretion. I mean no two individuals have an approach that is wholeheartedly agreed to by others. Valuation methods are like, erm, belly buttons - everybody has got to have one. Secondly, what is the purpose of valuation? I have this friend who claims his company's market cap is over Rs. 100 Crore so I asked him if he is planning to sell his company if someone will make a bid at that price. He said he has no plans to sell at all or even dilute his equity now. So why bother? Thirdly, valuation is notional. A 3rd party like a VC for e.g. sets a number (don't even bother to ask how the number was arrived upon) that will help shape his exit strategy (if he can find a buyer who'll comply). Fourthly, it beats me how you can value something to be so high when the company itself is not a going concern (as the old timers will say) and especially when it bleeds profusely. Finally, it simply comes down to managing working capital and nothing to do with RoI for the shareholders. Everybody hopes the next lot who will fund the enterprise will fork over a lot more money that will make them all look good. Of course a lot of financiers have made money this way but just look at the trail of mess... Old school business folks kited their debts with public sector banks and the noveau riche entreprenuers sweet talk the VCs who play with OPM (other people's money) and the party goes on, eh? more
May 10
Probate of Will Succession Certificate Letter of Adminstration & legal matters. For details contact Pratap 8767689217 / 9819389386. On 9 May 2016 20:03, "Shikha Chhabra" wrote: > more
May 09
What matters is all these companies suddenly are valued ib Billions one day and nearly half their value next day. It was great to see Dhirubhai Ambani make his company a billion Rupee- after nearly 25 to years- in his life time and here we see toddlers like Flipkart are billion $ in 1 or 2 years!!!!! Is there some black money conversion going on behind this? Note this brings me to another puzzle- manufacturing is not picking up- why with very little effort, you are billion dollar in less than 1to 2 years- if you have the right------????? (I wish I knew the secret). Note all these IT companies only are valued in Billions (integral or small fraction)- they don't know millions. Are IT/ED/CBI/CVC/CAG/ RBI/ SEBI sleeping? You play cricket or get into bollywood, why study, make bogus marks cards.Politics will earn you much more in one 5 year term. more
May 09
Yes, it does show something seriously wrong. But, it will not change. It is like Western banks printing money to tide over the present crisis. That is the only 'solution' they know. Similarly, the desk guys at VC's simply follow the mob. Now Silicon Valley is tired of the big failures of the unicorns, so they are cutting, hence the guys cut here. After all, like the Western bankers, none of these guys are putting their own money. All they need is an explanation (or more correctly, an excuse). If they win, it is their smartness. If they lose, the excuse is ready. But, isnt this the story of all human endeavour using someone else's money? You see this in corporates, government, NGO's, wherever..... more
May 09
