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High-tech stocks: Cash return or crash and burn?

In the space of a few years, the Californian boutiques helping high-tech companies come to market have seen their profitable niche invaded by major Wall Street firms. Now banks and investors from across the Atlantic are threatening to get in on the act. But are the Europeans buying into a maturing industry - or a market reaching its top? Michelle Celarier investigates

Turning up at a local charity event recently, a San Francisco investment banker was stunned by the number of Chanel suits. It was like something out of Bonfire of the Vanities. "Social X-rays" - the term Tom Wolfe coined to describe New York's skeletal society matrons - had replaced the laid-back "California girls" the banker remembered from his college days at Stanford University.

All this haute couture is just one sign of the San Francisco Bay area's financial coming of age. A posting here was once the kiss of death for an investment banker's career, but the boom in technology-company flotations has changed all that. "There's a ton of money coming in here," says Mike Hall, an attorney at Venture Law Group in Menlo Park's Sand Hill Road, a two-mile strip in Silicon Valley where scores of venture capitalists have their offices. Thirty miles (50 kilometres) south of San Francisco, this street of unassuming suburban business parks houses some of the most expensive real estate in the US, rivalling Manhattan and Honolulu.

A huge amount of money has been pouring through this district. Last year, venture capitalists raised $4.5 billion to pour into technology start-ups, the biggest chunk of it going to Californian companies.

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