Tech Bubble: Wall Street and Silicon Valley Could Be In For It Again

pets dot com Tech Bubble: Wall Street and Silicon Valley Could Be In For It AgainDealbook has a roundup of bubble talk from investors and experts talking about how the hype around startups reminds them of the boom before the dot-com bust:

“I’m not saying Quora, Foursquare, Square aren’t eventually worth a lot of money, but the price to pay to get into those games is kind of amazing – $50 to $80 million?” said Dave McClure, founding partner of 500 Startups, a technology incubator in Silicon Valley.

New York investor Fred Wilson agrees: “I have never seen phases like this end nicely.”

Money for startups has been flowing easily in Silicon Valley and in New York as well, where lightweight startups with less-than-airtight business models like Tumblr and GroupMe seem to have no trouble rustling up cash ($3.2 million in the latest round and $9 million, respectively).

The current bubble won’t have quite the same widespread effect as the dot-com bubble if it bursts because companies are not going public (although excitement over Facebook’s IPO is so high that investors have started selling derivatives of the limited pre-IPO stock).

But a bursting tech bubble would hurt more than just angel investors in New York and Silicon Valley. Having millions of dollars thrown at them isn’t always the healthiest thing for a startup, as the success of Y Combinator’s light-on-investment, heavy-on-mentoring approach has shown. And a major crash could scare investors and dry up funding for worthy startups in the future.

ajeffries [at] observer.com | @adrjeffries

Article continues below
More from Politics
2. The general election. In November, whichever two candidates make it out of the gubernatorial primary will face off to become the next New Jersey governor. While Phil Murphy (pictured) is the presumed favorite in the race due to current New Jersey Governor Chris Christie’s dismal approval ratings tanking Republican credibility for many NJ voters, the results are still up in the air. Additionally, with 11 months until the race, there is still ample time for a dynamic shift that could leave another candidate at the top.
Murphy Batters Wisniewski at Monmouth Dems Convention