Goldman Sachs technology analysts hosted a call today where they made the case that technology growth companies are trading at a relative discount, approaching 30% to 'defensive' companies with many EPS growth levers. outside of incremental margins garnered from revenue growth. Here is the link Goldman Presentation 111808
Public company valuation is an underpinning of private company liquidity events, and a benchmark for investments too. This market reality seems to correlate pretty well with the advice many VC's are giving their portfolio companies to contain expenses, even at the risk of giving up market share.
The advice works well in the public markets, where it's easier to rotate in and out of your ownership position. In Venture, we tend to see a move of investment stage to the 'right' as a way to ameliorate risk profiles (where early investors seek to be adequately compensated via a risk premium) for their efforts. Other VC's remain true to form and concentrate on funding innovators (Union Square, Spark, First Round)