It’s the Innovation Economy Stupid!

I have been reading a lot of articles recently declaring a “bubble” in the VC or tech world. To be honest, I am trying to understand the logic supporting this fascination. I know we have pundits: either political, economic or other types, who consistently create something out of nothing, but this topic is one that never ceases to amaze me. If we really look at the anatomy of a “bubble”, it would reveal a structural flaw. In the real estate market we had huge price gains linked to cheap mortgage rates but the most important issue was the corrupt and lenient lending standards of the institutions underwriting practices. During the last tech bubble, we had inflated public and private valuations based on ether. Just hope and hype. Today, with all the problems that this country faces to retain or recapture leadership, technology bubbles is not one of them. We should be celebrating the innovation economy not decreeing it as another bubble. Structurally, there is no major flaw. Pricing is up because companies are actually making money, delivering goods and services that people want. With few exceptions, most companies have real business models that weren’t even available in the late 90’s. There are more angels pumping early stage capital into ideas. This is a much needed and welcomed part of the infrastructure as more companies therefore get created. Yes, many will fail, but that is the price of innovation. It has never been any different. Also, the economics of the early stage deal have become more viable. Capital efficiency, another buzzword for this generation, is actually true. Have you seen how little it actually costs to get in business these days! Instead of bubble talk, how about changing the mindset to one of possibility. Our children and associates all benefit if the economy is built on the backs of entrepreneurs. It is one of the great things about us. We are the best innovators and nobody can take that away. Celebrate this revival in innovation, don’t chastise it.

About cavacapital

Cava Capital is a venture capital firm targeting go to market stage investments (series A and B) in next generation marketing solutions companies primarily in the Metro New York region. We are business builders, actively assisting our CEO's in the critical areas of Sales, Business Development and team building, bringing our exceptional and deep network to each and every portfolio company to help drive success. We prefer enterprise facing companies, but aren't scared off by the new consumer models.
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