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Are We in a Tech Bubble?

Although dot com bubble still haunts people, we are already setting our steps into another bubble: tech bubble, aren’t we?  This is a novel argument suggested by CB Insights recently according to VC financing and IPOs hitting dot com highs to the entrance of corporations, hedge funds and Asian investors into tech investing, however, they placed their conclusion: we are not in a tech bubble.

There are several reasons that lead people to think we are in a tech bubble.

1. VC funding has hit levels last seen during the dot com boom.

1. VC funding has hit levels last seen during the dot com boom.

CB Insights’ Q1 2014 Venture Capital Activity Report highlighted that VC funding totaled almost $10 billion ($9.992B to be exact). This was the most since Q2 2001 during the now infamous dot com boom.

2. VC-backed IPOs also hit their highest levels since the dot com boom.

2. VC-backed IPOs also hit their highest levels since the dot com boom.

Beyond really high VC funding tallies in Q1 2014, venture-backed IPOs also hit the highest levels since Q3 2000. Lots of money + lots of VC-backed IPOs.

3. Corporates are investing big money into late-stage tech deals.

3. Corporates are investing big money into late-stage tech deals.

Corporations are definitely getting active. They’re now investing in 4 out of 10 largest tech deals and their rate of participation in large tech financing is only increasing.

4. Corporate VCs are hot to invest in super speculative early stage companies.

4. Corporate VCs are hot to invest in super speculative early stage companies.

Adding more fuel to the corporate “dumb money” theory is that they’re not limiting their investments just to late stage big money rounds into “proven” tech companies. They’re also getting involved with the highest risk, most speculative financings at the seed stage.

5. Hedge funds & mutual funds are aggressively investing in private tech companies.

5. Hedge funds & mutual funds are aggressively investing in private tech companies.

Add in the Wall Street money guys aka hedge funds and mutual funds who cannot get enough of tech and things are looking even more bubblicious.

6. Big chunks of money from Asia is pouring into private tech companies.

6. Big chunks of money from Asia is pouring into private tech companies.

If new players in the investment ecosystem get your bubble radar going and corporations and hedge and mutual funds weren’t enough, how about money coming in from Asia? Check. Alibaba and Tencent have actively been investing in US tech companies. And frequently, they’re doing so in massive rounds including to the likes of Lyft, Tango, Shoprunner and Weebly to name a few. Asian investors pouring money into US tech startups?

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