QOTD: Grand slam appetites wane

via Bloomberg:

“We’ve completely stopped investing in private tech,” said Jeremy Abelson, a portfolio manager at Irving Investors, a small hedge fund based in New York. “I’m done with intangible valuations, unknown exits, unknown liquidity, and I want something that if I put my money into it now, I’m not going to hit a grand slam, but I’m going to get something that’s immediately yielding.”

Safe to say the startup mania is over. It hasn’t “burst” like a mainstream bubble because it was never mainstream. There are a handful of retail mutual funds with very small (relatively speaking) amounts of capital invested in venture-backed companies. That’s it. All the rest of the money is from already wealthy people and organizations. The deflating of this particular bubble will not be nearly as painful as the Dot Com bust or the housing bust. It’s just not widespread enough to be “systemic”.

The bubble didn’t burst, it’s got a leak in it and the deflation is happening slowly. Tolerably. Real valuations will return to the space, people’s attitudes will adjust accordingly, life and business will go on.

Most at risk: San Francisco commercial real estate, Bay Area rental properties, the Wall Street IPO machine (which has already ground to a halt), maybe some food truck entrepreneurs and, finally, the egos of a handful of Valley King Midases.

NBD.