Source from Wikipedia

1

AsiaToday reporter Jina Koh - The worldwide startup boom driven by Silicon Valley might be a bubble? The IT industry that went through the dot-com bubble in the late 1990s is at risk again.

On December 7, the American business magazine Forbes highlighted growing concern about Silicon Valley's technology startup bubble. It said those investors, who clamored to get a piece of hot tech startups like Zenefits and Snapchat a year ago, are probably happy they never had the chance.

Each day there's a new report casting gloom on Silicon Valley's "unicorn" startups. HR software platform Zenefits, which had gone to a valuation of $4.5 billion in just about two years, has now a nickname of 'failure'. Messenger service Snapchat is losing its share value, and dress rental company Rent the Runway lost seven top executives within a year.

Web-based file sharing service Dropbox faces skepticism about its revenue potential. Theranos is losing business deals for exaggerating its product efficacy. Office sharing company WeWork is considered as highly risky in real estate deals.

Along the decline of "unicorns", which refer to those private companies valued at more than $1 billion, those companies like Zirtual and Homejoy - not unicorns, but highly valued and highly funded - abruptly shut down as well.

According to Down Jones survey, there are more than 120 unicorn companies in the United States, which has increased nearly three times for more than a year. Unicorn companies are born fast, further fuelling the tech bubble.

The unicorns are perfect when their market value increases. But the problem is when they become cheap become 'unicorpses'. This will likely to worsen the opaque world of startup investment. As mentioned above, Dropbox and Theranos are already losing their market values.

General public receive information on the health of these private companies. Media outlets exaggerate the achievements of these startups. Of course, startups are also to blame for focusing on growth with growth potential rather than making real achievements.

However, some claim that today's startup phenomenon is different from the dot-com bubble in the late 90s, because investment on dot-com companies was much larger, and it is too early to say it's a bubble.