The valuations of many tech companies suggest that there is in fact a bubble in the market, a venture capitalist said Thursday.
In some cases, valuations are about twice as high as they should be, GGV Capital founder Hany Nada said on CNBC’s “Squawk Alley.”
On a case-by-case basis however, there are still some companies that are not valued as high, Nada said.
“There are some unicorns, companies that are actually undervalued. Take a look at companies that are truly disruptive, companies that are outperforming expectations,” Nada said.
On the plus side, high valuations can encourage companies to raise cash so they can have a war chest in case the market does fall and there is a need to expand, he said.
Nada also said that high valuations create a good environment for mergers and acquisitions in the tech sector, both from the giants and smaller companies.
Image Credit: CC by Heisenberg Media