Meckler Sees Anxiety Selling in Startups

Jupitermedia CEO Alan Meckler is a veteran dealmaker who has bought and sold many companies. He thinks we’re about to see a wave of deals involving Internet properties, driven by anxiety that financing issues may narrow the exit strategies available to startups.

“Since we purchased Mediabistro in July we have been offered an amazing number of Internet properties,” Alan writes on his blog. “I think the mortgage mess might be part of the equation. My reasoning is that many entrepreneurs might be panicking. Perhaps they reason that all types of funding might be curtailed due to the credit crunch enveloping America … so perhaps this is the time to sell rather than hunt around for more funding for expansion.”

Meckler survived the original dot-com bubble, and sees some similarities to 1999-2000, with one critical exception: “What is different this time is that many of the properties being offered have solid business models but lack the ability to obtain critical mass. Combining with a larger entity is appealing.”

What might this mean for the data center sector? Landlords and colocation providers are far less dependent on startups these days than they were in the initial dot-com consolidation. The sale of a tenant or customer often introduces uncertainty. But the scenario Meckler describes – sound businesses selling out to larger companies with deeper pockets – could mean that a startup will be superseded by an expansion-minded credit tenant.

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About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.