UPDATED 22:29 EDT / DECEMBER 02 2015

NEWS

Survey finds majority of startup founders think we’re in a bubble and it might be about to burst

A survey of startups has found that it’s not just skeptical tech journalists who believe that we’re in the middle of the second great tech bubble that is close to bursting, but startup founders as well.

The “State of Startups” survey, from First Round Capital, of 500 startup founders of venture capital-backed startups found that 56 percent of respondents expect it to get somewhat harder to raise capital in 2016, with a further 10 percent believing it will get much harder.

Optimists were few and far between, with only three percent believing it will be easier to raise capital in the year ahead, with the remaining 31 percent believing nothing will change in that it will get neither harder nor easier to raise venture capital.

On the more straight question of “are we currently in a bubble,” 73 percent of respondents replied that we are, although there was an interesting split, with enterprise company founders denying that the tech industry is in a bubble versus founders who run consumer-focused startups.

Not surprisingly given the mixed results from tech offerings in 2015, Initial Public Offerings (IPOs) divided those questioned with a third of founders believing there would be more IPOs next year, a third believing there would be fewer and the remainder predicting that 2016 would be the same as 2015.

The perhaps somewhat gloomy beliefs of those surveyed also reflected in the future of term sheets and how startups are run, with many believing that investors will have more control over deals in the next few year, 63/37 entrepreneurs/investors control split today to 46/54 going forward.

Despite the orgy of venture capital to companies that don’t even have a business plan that involves a pathway for them to actually earn money from their companies, the startup founders tended to be a somewhat skeptical lot when it came to tech hype, with wearables and Bitcoin topping the list of over-hyped technologies, followed by virtual reality, the sharing economy, drones and the Internet of Things.

Conversely, mobile was nominated as being the most under-hyped sector of the tech industry, which given the sheer money and attention mobile-focused startups are currently getting is at the very least odd.

In the admiration stakes, it came as no surprise that nearly a quarter of respondents nominated Elon Musk as their most admired tech leader (22 percent of the vote), followed by Jeff Bezos (7.5 percent), Mark Zuckerberg at 3.3 percent and Larry Page at 2.6 percent.

Sheryl Sandberg was the most admired woman nominated by respondents but managed only 0.7 percent of the vote.

Reality check

It’s easy as a tech journalist to be highly skeptical of startup founders given the horror stories that emerge from time to time of companies raising bucket loads of venture capital while never having thought ahead to how to make money from their idea; the concept is perhaps best expressed in the movie The Social Network when Sean Parker tells Mark Zuckerberg that ads aren’t cool — the idea of building it and worrying about the revenue later, which has polluted a generation of startups and ultimately will be the cause of the bubble bursting.

That said, the results from this survey are surprisingly refreshing in that the majority, be it not all startups, are run by people who don’t need a reality check and actually are aware of how the real world works, even from their ivory iPhone-only towers in Silicon Valley and San Francisco.

To cut a long story short, there may be hope for the startup sector going forward yet.

A full summary of the report can be read here.

Image credit: bortescristian/Flickr/CC by 2.0

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