Could Vietnam become the next silicon valley

500 Startups is a strange investor and Silicon Valley makes for a strange comparison.

The app stores are full of apps from developers being supported by investment dollars from the Silicon Valley ecosystem and yet many (most?) of those apps are free. If a customer is someone who pays you and a product is something you sell, then many of these start-ups being propped up by investment dollars have no customers and no product.

Why invest in them?

These are risky bets from people who have the money to risk. As with any high risk investment, the investors are looking for big payoffs.

How can you get a return on your money investing in a company with no customers and no product?

Well, it's not entirely true that they have no product and no customers. The way that these high risk investments in Silicon Valley start-ups pay off is not through the slow and steady growth of a typical business, but through big exits. One way to make an explosive exit is by going public, but an extreme few of these companies ever go public. Much more likely (but still relatively rare, which is why this is a high risk investment strategy) is that these companies get acquired at ridiculously hyped valuations by companies with big money sloshing around (Facebook, Yahoo, Google, etc.) In this strategy, the customer is these big companies and the product is the start-up itself.

The name, 500 Startups, says a lot about their strategy. They make lots of small bets in the hopes that one of these bets will blow up.

The reason some of these investors are looking outside of Silicon Valley is because in the market that is start-up investing in Silicon Valley, there is enough money sloshing around that the start-ups get a lot of leverage, especially the more promising start-ups. This is a cycle which rises and falls, and we are about to go into a dip, but investors are always on the search for a better deal.

Not everyone agrees that what these investors do is good. By propping up these "businesses," a lot of money gets tied up in private markets which don't benefit the rest of us and which are closed off to regulars. See Mark Cubans take on the issue here.

However, the Silicon Valley angle of the originally linked article is probably blown out of proportion. As I mentioned previously, this just looks to be a technology park opening up to attract talent on the workers side, provide office space on the employers side and possibly to create an economic zone with special rules which can serve as an experiment for the rest of the country.

Good for them.

 

Do you realize that is a Chinese curse?

"May you live during interesting times" (Paraphrasing)

 

Yes.

That's why I put it there, as it seems like the world has been under their "spell" for awhile.

My hope is that the world can re-adjust without too many serious hiccups if China does undergo a few shocks.

And if that happens, I hope the world will only get hit with higher tides - as opposed to a tsunami.

nwlivewire

 

WELL SAID DUDE!

Also, creating economic zones and technology parks will also repatriate their national brains who are now working offshore.

There are many layers and levels of potential benefits to the money that could flow there.

All this is a gamble of sorts, but this seems to be one of the most popular games the monied investors like to play these days.

If that little ball happens to fall on your number, you reap great rewards.

V/R,
nwlivewire