Since the Great Recession, tens of thousands of tech starts ups received enough money to have valuations over a billion dollars.
This is something similar to the construction boom of condominiums in China in the early 2000s. China was the beacon of construction erecting full cities of condominiums. One of the drawbacks was most of the units sat empty since the demand was simply not there. The oversupply ended up costing investors billions.
A similar situation is forming with the tech unicorns. These companies are bleeding cash all over the place. The rush by investors to capitalize on the tech boom means that funding was freely available for anything that seemed like a good idea.
It all kicked off with the idea of finding the next Google boys or Mark Zuckerberg. The valuations of Google and Facebook got the investment funds flowing. Another factor was low interest rates meant investors are looking for bigger returns, thus assuming more risk.
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