In Silicon Valley, Investors are Jockeying like it's 1999

"The two men signed a deal with Y Combinator in which they paid $6.5 million to gain first access to roughly 40 promising entrepreneurs selected by the elite incubator. "<p>This is completely false. We didn't sign any deal with Ron and Yuri. They simply offered 150k apiece to all the startups in the winter 2011 batch. Anyone else could have done the same thing.<p>Reporters often get the facts wrong, but this is one of the more extreme examples I've seen.

Not knowing a whole lot about Silicon valley in particular and even less about economics, I still get the feeling that the US tech industry is very much in a bubble.<p>From the outside, these absolutely soaring valuations of everything from established players like Facebook, Twitter and LinkedIn, to new start ups (Color being a recent example), resembles a somewhat illogical and overly optimistic view of the value of those companies.<p>Also many new and unproven companies raise amazing amounts of money, for, at least seen from the outside, downright silly business proposals (share your credit card expenses, anyone?).<p>Apart from the valuations, there is the point of founders and early investors taking huge amounts of money "off the table" in subsequent funding rounds. A recent example being Groupon, where I think up to 30-40% of the raised capital went directly to "executive officers, directors or promoters". In my uninformed opinion, in a "normal" market, very few investors would accept that money invested for business growth, was used for the purpose of massive payouts to founders and C level personnel. However in the US, at the moment at least, it seems very common. Maybe this has to do with the assumed fact, that if some investors aren't up for those terms, other investors are itching to jump in.<p>This gives way to first founders having massive payouts. Then directors, then investors, then the next round investors etc. This, in my mind, resembles the "greater fool" theory, which was common behaviour during the recent housing bubble (buy the house, flip it 6 months later for 20% profit, next owner repeats).<p>Finally, there's the "gold rush" or the less flattering "herd" mentality, where it seems that there are now so many people interested in investing in tech, that again valuations goes higher and higher. We even have hollywood actors, investing heavily in mobile app companies.<p>As mentioned, I am not an expert in economics, bubbles or Silicon valley, so I'd be interested in hearing from anyone who can question my conclusions, and add to the discussion.

A question someone like me has, is how do you get the attention of these investors? I have a few ideas for products, a couple of which I've done preliminary coding for on the side. But the problem I have is<p>a) I have no connections<p>b) I work full time, so I have very little time other than late nights to work on the things I'm really interested in. I feel like I'm missing huge opportunities because I can't work on the things that I find really interesting because I'm doing someone else's work.

"The momentum is driving a wave of deal envy and trash talking—complete with power plays, personal feuds and turf wars among Wall Street bankers, billionaire speculators and venture-capital veterans."<p>Sounds like a bubble to me. Anybody remember the pets.com sock puppet?

I do think there is a bubble of people hyping startups. Facebook got a stupid valuation and everyone started reporting that the 1999-2001 bubble was back. But that was just Goldman Sachs bullshitting everyone. It doesn't mean every startup has a stupid valuation now.