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Tech Bubble May Be Ready to Burst in New York City

Published on Dec 22, 2010


Read 'Tech Bubble May Be Ready to Burst in New York City' at 'Time to Start Up,' the small business blog by BizFilings.
The New York City tech startup scene may be creating a potentially dangerous investment bubble - one many investors and analysts are anticipating to burst sometime over the next year. Over the past few years, a wealth of successful New York City tech startups such as Tumblr, foursquare, Etsy and GroupMe has led to an inflation of angel and venture capital investments. Even Silicon Valley has a hand in the game, with Google buying up a $2 billion high-tech tower in Chelsea and Facebook recruiting programming and engineering talent away from the Big Apple. The attention has created competition among investors that analysts worry has led to a number of bad investments and over-valuations, inflating the market beyond its worth. However, Adrianne Jeffries points out in the New York Observer that this bubble is nowhere near as dangerous as the dotcom bubble of 2000, which burst due to an overabundance of public offerings, thereby spreading risky capital throughout the market. Some predict that the bubble, if isolated to select startups, may actually end up being healthy for New York's tech industry, freeing up space for tech entrepreneurs forming a company. "My prediction of what will happen is that there could be a meltdown in the New York tech scene," Lawrence Lenihan, managing director of New York-based FirstMark Capital, told CNN. "But it's like a forest fire: It's good, it clears out the dead wood."