There is definitely a bubble right now, I've seen average 8-15mil rounds for companies that offer something tangental to a popular service (it's LIKE FourSquare, or it's LIKE Pandora) despite the fact that original services themselves are not necessarily making huge exits. Perhaps it's just that the horizons on the dotcom VC funds are expiring and there are lots of new funds?
Industrials correlate to GDP, and GDP is projected to be flat. Same goes with consumer products and volatility is too high in media. If you have capital to put to work, Tech appears to have the highest risk/return profile.
Phrased differently: if you had $10mil, where would you put it?
25% stocks, 25% bonds, 25% gold, 25% cash?
(That's literally what the "Fail-Safe Investing" book boils down to. http://en.wikipedia.org/wiki/Fail-Safe_Investing)
" It might seem that a Permanent Portfolio
containing these four contradictory investments would
be neutralized: As one element rose, another would fall
and nothing would be gained.
On a day-to-day basis, that can be true.
But over broad periods of time, the winning investments
add more value to the portfolio than the losing
investments take away."
This is utterly absurd and shows a complete misunderstanding of economic growth.
If you're pitching your business as X for Y and X is still a massively unproven startup - you've missed the train.
Work on creating your own X - you want to be the market leader - its the only way to truly win in the consumer web.
Take Facebook as an example. Is Facebook worth $50b, per the recent Goldman Sachs investment? It's possibly worth much more, if we assume that Facebook is the winner-take-all in a network market (social networking). Are there significant uncertainties related to Facebook's revenue model and the company's ability to fend off substitution threats? Yes. But this is consistent with the risk/reward profile that comes with an equity investment in a privately held, high-growth tech company.