It is difficult to avoid all the talk about social media/Internet 2.0 investment talk, especially when the news comes out that JP Morgan Chase is launching a fund to invest in the space. The existence of a shadow economy of private companies provides the blogosphere with a great deal of fodder. We noted in an earlier screencast the importance of keeping tabs on these private companies for investors in already public companies. Now some of these companies are coming public. Investors need to recognize that just because a company is hot does not absolve you from doing your own due diligence. One way to think about this is to sketch out how these companies can monetize their user bases. For some time it may not matter to the market. Eventually it will. In today’s screencast we note the importance of good old fashioned security analysis even when it comes to analyzing hot Internet start-ups.
Items mentioned in the above screencast:
Rolfe Winkler, “With another Internet boom taking off, giddy investors shouldn’t lose sight completely of old-fashioned security analysis.” (WSJ)
Beware the social media bubble. (Fortune Finance)
Which social media services would you be willing to pay for? (MarketShot)
The tech bubble did have some positive effects. (Tim Duy)