Another Dot-com Bubble? Tech Sector At Risk Say Leading Investors

Silicon Valley startups are spending money at rates not seen since the dot-com bubble burst at the turn of the century, leaving the US tech sector at risk of financial meltdown, according to two of the world's leading venture capitalists.

Fred Wilson, whose firm Union Square Ventures has backed companies including Twitter and Tumblr, wrote in his blog that burn rates – the amount which startups spend – are "sky high all over the US start up sector right now."

Wilson is clear, saying that startup tech is "Burning cash. Losing money. Emphasis on the losing."

He echoed the fears of Bill Gurley, a top-tier tech investor who, speaking to the Wall Street Journal, said the tech sector was taking risks "unprecedented since '99" – when the dot-com bubble burst and crippled the industry.

Gurley said: "Silicon Valley as a whole or that venture-capital community or start up community is taking on an excessive amount of risk right now.

"More humans in Silicon Valley are working for money-losing companies than have been in 15 years."

He said that many involved in the booming business don't remember the dot-com bubble, and are spending money "without thinking."

One such example of reckless spending and overestimated valuations is Snapchat, the messaging company valued at $10 billion that has yet to declare how it intends to find ways to monetize.