High Valuatations Suggest Tech Bubble, Says Venture Capitalist


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.

Reprinted by permission.

Image Credit: CC by Heisenberg Media

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