Talk of the bubble bursting eventually surfaces with every successful market. When valuations are increasing exponentially, excitement is building to a fever pitch, and companies are sprouting seemingly overnight — it’s almost like everyone becomes afraid that success won’t last. “Should it burst, the tech bubble will have ramifications that ripple around the tech world like the shockwave from an apocalyptic asteroid. Most tech hubs are not self-sufficient at all; the fact that they are always referred to as the ‘Silicon Valley of [insert country]’ should be a tipoff that they are merely branches off the trunk that is Silicon Valley. Even prolific hubs like Israel, China and India depend on Silicon Valley to pump capital through their arteries.”
Additionally, the media points to the emergence of unicorns — those companies valued at more than $1 billion, like Slack — and now the “decacorns,” which are those valued at more than $10 billion, like Uber (which has been given the illustrious valuation of $50 billion). CB Insights notes that there are currently 107 of these unicorns whose fanciful rainbows may begin to blind investors, and the Valley, to the overall reality that companies cannot all reach those levels of value.
At the same time that these self-proclaimed soothsayers are issuing warnings, there is the other side of the coin, where the apocalypse may actually have to wait a bit longer. Unlike the housing market and the previous Silicon Valley burst that started the 21st century, the sky is not falling here and Chicken Little should be put on mute at this stage in the tech startup game. Lessons have been learned from the past, and today’s investors and entrepreneurs do not plan on repeating history.