Tech IPOs Spawn New Millionaires (and Billionaires) in Silicon Valley

Posted by Adam Sharp - Wednesday, May 25th, 2011

The WSJ published a nice article today on the newly-rich of Silicon Valley.

LinkedIn's founder Reid Hoffman -- for example -- is worth $1.7b after his company recent IPO. He's worth $1.7b on paper, of course.

He only sold $5 million worth of his stake in the offering. The rest of his shares may be "locked" for a period following the IPO, and the price could go down (a lot) before he gets the chance to sell more.

Regardless, he's suddenly filthy rich. So are a lot of employees at LinkedIn (Nasdaq: LNKD), and other new tech firms.

Get ready for a flood of web/tech IPOs. Zynga, Groupon, maybe Twitter, and dozens of smaller names.

Excerpt from the WSJ piece:

With more IPOs in the offing, from Zynga Inc. to Groupon Inc. to Facebook, the social-media craze has become America's latest supernova of wealth creation, launching a new generation of millionaires and recalling the instant riches of the 1990s dot-com explosion.

Terms like sudden wealth syndrome and "affluenza," which had largely vanished from the offices of Palo Alto, Calif., and the cocktail parties of nearby Atherton, are back.

And a quote for the "this time it's different" files:

"We've been through such a number of watershed events over the past decade, and those lessons are writ so large," says Chris Sheldon, director of investment strategies at BNY Mellon Wealth Management, which has a number of wealthy tech clients. " I think people seem to have a better chance this time around of starting out the right way."

The rest of the article is worth a read (might require a subscription).

See more about whether the recent tech frenzy is a bubble here.

Times are good again in the Valley for web entrepreneurs. I have a friend out there, and from 2008-9, he said interest in web/social-media had all but dried up. How quickly things can change.

  +4

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