New York’s Tech Bubble Hurts More Than Just Rich Angels

angel bubbles New Yorks Tech Bubble Hurts More Than Just Rich AngelsMG Siegler has a post up at TechCrunch giving the big “so what” to doomsayers who have been fretting about a tech bubble:

In other words, if this “bubble” were to pop, it wouldn’t be the mothers and fathers of the world hoping to put their children through school who would be getting screwed. It would be the private investors. It would be a handful of (mostly) rich people who would be out of some of their money.

Siegler is talking about the valley, but the situation in New York is similar: it’s mostly angel investors sinking money in the this latest round of rockstar right-coast startups — people like Ron Conway, whose portfolio went from being five percent New York companies two years ago to 20 percent “and climbing.”

It’s true that the fallout from an angel-fueled bubble would be more contained than the fallout the dot-com bubble, in which many ordinary Americans put their money into the inflated IPOs of companies like Pets.com.

But that doesn’t mean a bubble can’t do damage. The flow of easy money undermines the incentive to find a revenue model, stay lean and work hard. A tech funding bubble could ultimately hurt Silicon Alley’s tech scene by taking away the natural mechanisms that force startups to survive.

ajeffries [at] observer.com | @adrjeffries