New Tech Bubble May Burst

The trend of social-media startups being valued in the billions could come to a brutal halt, experts say. Companies like Twitter, Zynga (the creator of Facebook’s Farmville) and Groupon are less than seven years old, but valued at as much as $6 billion each (indeed, Groupon just turned down a $6 billion offer from Google). After the bloody history of Wall Street and the dot-com boom, venture capitalists now wonder if all the money that is being pumped into small social-media ideas will eventually pay out. One warning sign is the rapid pace of new investments. “I always get a little nervous about bubbles when five different angel investors ask me to join their brand new angel funds” in one week, an economic scholar at Stanford University said.