Sunday, September 13, 2015
Smell of a bubble as mobile startup valuations hit $800bn; Modi euphoria turns to angst; Britain can't cut its way to prosperity -- it has to be built
1 Smell of a bubble as mobile startup valuations hit $800bn (Olga Kharif in San Francisco Chronicle) The number of mobile Internet startups with valuations crossing $1 billion has jumped by a third in just eight months and that’s spelling trouble for some venture capitalists looking to cash in on their investments.
Already there are signs of worsening returns. The ratio of mobile Internet exits — startups that are either sold or go public — to investments has plunged over the past six quarters, excluding one outlier deal, according to tech adviser Digi-Capital.
“Mobile is frothy and bubblelike,” said Rajeev Chand, managing director and head of research at Rutberg & Co. Companies that would have received $8 million to $10 million in investments a few years ago are now getting as much as $50 million, he said. “There’s way too much money going into mobile delivery companies. The economics are fundamentally not sustainable.”
Investors have jumped into mobile Internet startups as services from dog walking to shopping to food delivery became available through smartphones. In 2014, mobile data traffic worldwide was almost 30 times the size of the entire Internet in 2000, according to Cisco Systems Inc.
As a result, mobile Internet companies that crossed the $1 billion threshold — known to some as unicorns — have swelled to about 90 for a combined valuation of more than $800 billion, Digi-Capital said in a report last month. Investors poured a record $50 billion into mobile in the past 12 months, it said.
All eyes will be on some of the high-profile mobile companies — such as Uber Technologies, Snapchat and Square — when they go public. Uber, the ride-hailing app, is valued at about $50 billion — more than six times the value of car rental company Hertz Global Holdings Inc. and about $4 billion greater than the market capitalization of General Motors.
2 Modi euphoria turns to angst (Gulf News) Investors who trumpeted Indian Prime Minister Narendra Modi’s rise to power are today becoming increasingly disillusioned. Some of the stagnation comes down to India’s politics: Modi doesn’t control parliament’s upper house, and his party faces elections in mostly poor, rural states where pro-business rhetoric could hurt.
A surprise to many — particularly given Modi’s reputation as a decisive leader with authoritarian tendencies — has been his timid approach to revamping the economy. The retrospective tax remains in place.
Modi has backed down on a proposal to make it easier to acquire land for development projects. He’s failed to implement recommendations to trim a bloated food subsidy bill. And he’s been unable to cajole opponents into passing a goods-and-services tax that would create a single market among India’s 1.2 billion people.
“We definitely want to see far more reforms,” Anil Gupta, the billionaire chairman of electronics components maker Havells India Ltd., said in an interview. “Our expectation from this government is much higher. We haven’t lost hope, but if you ask me if we’ve seen a lot of improvement on ground, no.” Foreign investors are also growing wary. India’s currency and stocks have been among the world’s worst performers since China’s yuan devaluation on August 11.
Jagdish Bhagwati, an economics professor at Columbia University and an influential figure in debates about India’s economy, cautioned that patience is needed. “We live in a democracy, and therefore the speed at which you can go is constrained — you can go two steps forward and then you take one step back,” said Bhagwati, who’s met with Modi and agrees with the direction he’s taken.
Global investor Jim Rogers, who said he recently sold all his India-linked shares, is sceptical about the way forward. “India has always concerned me — can it actually work in an efficient way? But then along comes this guy with a good record, on paper, says good things. So he’s got experience. Wins a huge mandate,” Rogers, chairman of Rogers Holdings, said. “If he can’t do it, who’s going to do it?”
3 Britain can’t cut its way to prosperity – it has to be built (Jeremy Corbyn in The Guardian)
Labour’s leadership election has been an extraordinary demonstration of grassroots democracy and public participation, which has turned the conventional wisdom about politics on its head. We have drawn in hundreds of thousands of people of all ages and backgrounds from across the country, far beyond the ranks of longstanding activists and campaigners.
Who can now seriously claim that young people aren’t interested in politics or that there is no appetite for a new kind of politics? Above all, it has shown that millions of people want a real alternative, not business as usual, either inside or outside the Labour party.
The hope of change and bringing big ideas in is now back at the centre of politics: ending austerity, tackling inequality, working for peace and social justice at home and abroad. That’s why the Labour party was founded more than a century ago.
For the Conservatives, the deficit is just an excuse to railroad through the same old Tory agenda: driving down wages, cutting taxes for the wealthiest, allowing house prices to spiral out of reach, selling off our national assets and attacking trade unions. You can’t cut your way to prosperity, you have to build it: investing in modern infrastructure, investing in people and their skills, harnessing innovative ideas and new ways of working to tackle climate change to protect our environment and our future.
The human response of ordinary people across Europe in the past few weeks has demonstrated the thirst for a different kind of politics and society. The values of compassion, social justice, solidarity and internationalism have been at the heart of the democratic eruption in Labour’s hugely expanded ranks. Our aim is now to take that spirit and hunger for change, that has won the support of the Labour party, to reach out to the whole of Britain.