Tuesday, September 16, 2008

The economy and the investors

The American economy is slowing down, and the concern about the impact on investment in tech companies is growing. Recently, I have read several news about this issue.

Today, I watched in GigaOm, a good video interview that Om Malik did with Bill Hambrecht, one of the Valley’s legendary bankers and co-founder of Hambrecht & Quist, which took some of the largest tech players in the world public. After sold his company, he started W.R. Hambrecht & Co., a boutique investment bank that uses auctions to sell company stock — most notably those of Google in its IPO.

Om Malik commented: "I was expecting to find him deeply worried; instead he was amazingly optimistic and, most importantly, wholly confident in the Silicon Valley way of life. Disruption will always prevail, he said, despite the current crisis, the rise of China and any of our backward government policies."

When Om Malik asked him how the current crisis would affect Silicon Valley, he answered: “I don’t think it will have much of an impact on Silicon Valley as an operating entity. What is going to be interesting is what happens to the underwriting/IPO market.”

You can see the video interview here.

I read in Forbes this month, an article called Barack Obama's Finance Lesson, by Sramana Mitra, where she talks about the Obama's statement at the Democratic National Convention that wants to cut capital gains taxes for small businesses.

She said: "For starters, small businesses don't pay capital gains taxes. And Obama plans to tax wealthy individuals and angel investors who can afford to invest in start-ups more than ever before. This will choke up entrepreneurship--precisely what he doesn't want to do.

Angel financing and bootstrapped entrepreneurship are critical weapons for mass reconstruction of the American economy, but only if government doesn't take away the money that would otherwise go into jump-starting entrepreneurship."

She also mentioned many examples of entrepreneurs that built their businesses with money of investors.

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