Monday, October 09, 2006

Silicon Valley VC firm to halt new $300 fund

Sevin Rosen says returns are too low to justify raising new money; existing funds will be invested.

One of Silicon Valley's premiere venture capital investors is pulling the plug on raising a new $300 million fund, saying it sees no near-term cure for the troubles plaguing the start-up economy.

In a letter Friday to prospective investors, Sevin Rosen, a firm started 25 years ago by legendary tech investors S.J. Levin and Ben Rosen, said it will manage its existing funds, but raise no new capital for the foreseeable future.

In our view it is all about the fact that from thousands of hi-tech start-ups only a few become a real success, which much or less impacts the ROI of the venture capital firms.

YouTube to be acquired by Google

It is obvious that the rumors heavily spreading the web for potential acquisition of YouTube by Google are most likely true. It begun with blog rumors and lately became serious news confirmed by Wall Street Journal, yet all sources report that the negotiations are in delicate stage and may break off any time.

Unlike what many people, experts and web professionals believe and have expressed as opinion that such a deal is highly unlikely, we think that this deal scenario is most likely to happen. Why? Google is leader in many markets and Google wants to remain leading company on the web, YouTube is undisputed leader on the online video market, so the Leader Google is going to acquire the leader on the online video YouTube.

In our view Google has all the reasons to go for a deal with YouTube, not because they cannot develop it on their own, but they already did something like Google Video, which is way too under the YouTube’s usage, so the most normal thing to happen now is Google to buy the leader regardless the legions of pissed off copyright holders.