Solving The ‘Tech Bubble’ Puzzle – McKinsey

Solving The ‘Tech Bubble’ Puzzle by David Cogman and Alan Lau – McKinsey & Co. Public and private capital markets seem to value technology companies differently. Here’s why. Aggressive valuations among technology companies are hardly a new phenomenon. The widespread concerns over high pre-IPO valuations today recall debates over the tech bubble at the turn of the century—which also extended to the media and telecommunications sectors. A sharp decline in the venture-capital funding for US-based companies in the first quarter of the year feeds into that debate,1 though the number of “unicorns”—start-up companies valued at more than a billion dollars—over…