New round of investment boom bubbles in electricity business investors are suspicious

Foreign media wrote today that after years of silence, e-commerce companies have had a rare investment boom in recent years, but high valuations have sparked fears of bubbles.

The following is the full text of the article:

Valuation level

As E-commerce companies start preparing for the Christmas shopping season, their investors are "discounting" them in the capital markets.

The latest round of fab sales in the online luxury market, set up last year, was lower than expected after Facebook's share price plunged. After several rounds of financing over the past 18 months, the gilt groupe and subscribing retailers BeachMint and shoedazzle.com are facing challenges.

In the third quarter of this year, retail start-ups received the highest level of money since the dotcom bust in 2000 years. But after that, venture capitalists worry that overvalued valuations could create a new round of e-commerce bubbles. The low valuations of recent rounds of financing and the loss of executives suggest investors are reluctant to invest in online retailers that have yet to prove their growth prospects.

"There are indeed some instances of high valuations in the field of E-commerce." The operations are complex and often require a lot of capital, but margins are low, so exit valuations are usually just one or two times times the income. "said Dana Stalder, a former ebay executive and partner of Matrix partners at VC companies, Danna Stald. Matrix Company has invested in fashion e-commerce startups such as gilt groupe and ethically fabulous.

Inventory and distribution costs have made it harder for new businesses to develop and, even if they attract buyers, will soon be taken away by imitators. It also makes it hard for start-ups to compete with older giants like ebay and Amazon for the 226 billion-dollar online retail market. If bubbles are formed, late investors will suffer, including investors betting heavily on Facebook, Zynga and Groupon. It could also have an impact on the returns of VCs and threaten future financing.

Until last year, e-commerce companies have been through 10 years of financing difficulties, because venture capitalists through the Internet advertising, business software and network analysis and other enterprises to achieve greater success. These markets have more potential acquirers and higher valuations than e-commerce companies. Google, Yahoo, Priceline.com and Facebook have at least 4 times times the market rate.

Amazon's 2009 acquisition of online footwear retailer Zappos was priced at 2 to 3 times times the market rate. The offer was at the same level last year when it acquired the quidsi of Soap.com and Diapers.com.

Market situation

Recent e-commerce start-ups are appealing to users through flash-shopping, custom apparel and subscription services, which all need to be promoted through smartphones and social media.

They use Facebook, Twitter, and Pinterest to attract fans, communicate with users, and launch promotions. Tablets and smartphones have increased the convenience of shopping, and sophisticated analytics tools have made it easier for them to launch precision promotions.

The Commerce Department's data show that the third quarter of E-commerce accounted for 4.9% of total retail sales in the United States. Forrester, a market-research firm, estimates that US net retail sales will reach $327 billion trillion by 2016, up 45% from last year's 226 billion dollar.

Investors have been bullish on E-commerce last year as consumers are expected to invest more and more in online shopping, a passion that continues until September this year. According to the US Venture Capital Association, the total number of venture capital investments in the retail sector in the third quarter doubled to $242.1 million trillion. This is even more than the 2010-year level.

"In the last two or three years, we have seen more and more subversive ideas in the field of E-commerce than in the previous 10 years," he said. Mobile phones and tablet computers are changing the way people buy online. Josh Kaupleman (Josh Kopelman) said that his Round capital had funded internet retailer Half.com.

Kaupleman's company is an early investor in Fab, jewellery retailer Chloe & Isabel, glasses maker Warby Parker and internet companies such as the beauty products website Birchbox.

Fab's recent financing deals suggest investors may be phasing out. Fab's surge has benefited from integration with Facebook, so users can see what their friends are buying. The company boasts 9 million users in 26 countries and regions around the world.

In July this year, the new york-based retailer financed 105 million of billions of dollars, leading the Atomico company in London. Goldberg, Fab CEO Jensen Gudeberg, said he had planned to complete the round with a 700 million dollar valuation, but at the end of June, one months after the Facebook IPO, he e-mailed Anderson-Horowitz (Andreessen Horowitz and Menlo Ventures, and other existing investors, informed them that the latest round of financing was undervalued to $600 million trillion.

"I didn't use the highest valuations and I had to make sure our investors thought our valuations were reasonable and appropriate." "Goldberg said.

At current rates, FAB will achieve $150 million trillion in revenue this year, Goldberg said. Some unnamed investors said they had abandoned the round of investments because they considered valuations too high.

Investment perspective

The Anderson-Horowitz Fund, which participated in the first two rounds of the Fab investment, remains bullish on the industry. The company has zulily the latest round of $85 million trillion in financing the mother-child flash-purchase website. Jeff Jordan, the company's partner and former ebay executive Jeff Jordan, called zulily "one of the fastest growing companies we've ever seen."

Warby Parker, also based in New York, raised $36.8 million this year in September. The company, which sells glasses through the internet and some retail outlets, has 10 times times the market, according to people familiar with the matter. Investors are bullish on the company's gross profit margin of 50%, which is twice times that of Amazon, the person said.

A spokesman for Warby Parker declined to comment on valuations and margins.

Alfred Lin, the Sequoia Capital Partner, Alfred Lin that high margins and high valuations are often unsustainable. He had previously been in charge of operations and finance at Zappos. Since joining Sequoia Capital in 2010, he has not paid much attention to E-commerce enterprises, the only exception is the online jewelry trading market Stella & Dot.

"We will certainly discuss E-commerce at the partners ' meeting," he said. "But the current valuation level has come to the point where we think it's Alfred Lin." ”

He led Sequoia Capital last year to invest 37 million dollars in Stella & Dot and joined the company's board of directors. While acknowledging the risks of the business, he remains bullish about the company's founders and appreciates the way they break the traditional e-business model. The company will sell some of its products on a variety of activities by fashion designers.

But Alfred Lin says high valuations have led to a lack of investment in Sequoia Capital.

Battery Ventures, who are at the same gate Menlo Dune Road, also face the same puzzles. Brian O ' Malley, the company's general partner, has led the investment in J.hilburn for menswear manufacturers, Blaine Omarie for flower distribution services H.bloom and furniture retailer Serena & Lily. But because of the high price, he refused to take part in most recent deals.

"These companies are looking at huge markets. "But I'm not bullish on all the companies, and I'm not bullish on all the valuations," he said. ”

These companies have become aware of this trend after many imitators have forced e-commerce start-ups such as Shoedazzel, BeachMint and gilt groupe to invest more in marketing money, even after the price of products has been lowered.

Executive turnover

In September this year, ShoeDazzle, who regularly sent handbags and footwear to users in the form of monthly fees, replaced former CEO Bill Strauss Bill Strauss, who was reins by the company's founder, Blaine Li Hu (Brian Lee). In the months when users did not shop, Mr Strauss stopped charging them for subscriptions, leading to a fall in sales.

The company, headquartered in Monica, Calif., has invested more than 60 million dollars from the Anderson-Horowitz fund and the Speed of light venture. ShoeDazzle spokesman hasn't commented.

BeachMint sells shoes and jewellery to subscribers. The company has just appointed a new CEO in July this year, after one months, when John Volturo, its marketing director, John Vaultoulo. Greg Steiner, the new COO Gregg Sterner, said the company was recruiting "people with traditional sourcing and retail backgrounds".

Last month, BeachMint recruited a purchasing general manager and is still recruiting more staff in the area. The company financed 35 million of billions of dollars this January through institutions such as Accel.

According to Bloomberg, a person familiar with the matter said last week that New York's flash-purchase website Gilt Groupe plans to sell its travel trading service Jetsetter and to replace CEO Kevin Ryan (Kevin Ryan) before the end of the first quarter of 2013.

In May 2011, Gilt Groupe received $138 million trillion in a round of financing for SoftBank, valued at $1 billion.

Kristen Green, a former equity analyst, Kristen Green that economic conditions are hampering the success of some start-ups, but bad investments based on irrational valuations hurt the entire market. Green set up a 40 million dollar fund in Forerunner Ventures in July this year, hoping to start early investment in e-commerce businesses.

Her early investment companies included Warby Parker, Serena & Lily, and Chloe & Isabel. "I want people to be able to keep a clear head. "said Green.