With IPO flops and billion dollar tech acquisitions, many experts are debating the existence of a tech startup bubble. Is it real? Or is it all bull? In its technical sense, a tech startup bubble is an investing phenomenon—an obvious, but unsustainable, market rise from increased speculation in tech costs. A classic example of a tech startup bubble is the Dot.com Technology Bubble (1994-2002), which is well embodied by the story of pets.com. They raised $82.5 million in an IPO in February 2000. Due to high shipping costs and low demand, they lost money on most orders and collapsed nine months later. Their shares plummeted from $11 per share to $0.19 per share.
Could we possibly be living in Dot.com Bubble 2.0? Three out of four venture-backed startups don’t return investors’ capital. Additionally, 95 percent of startups don’t meet their projected return on investment (ROI) revenue growth. There’s also the crowd that says there is no bubble. They point to less investment money in the market and the fact that people are investing more responsibly, giving smaller amounts to more companies.
To learn more about all this, check out the infographic below by bizbrain.org.