Looking for Signs of a New Tech Bubble

John Backus thinks the public pays too much attention to unicorns, and he's not referring to the legendary animal. The founder of venture capital firm New Atlantic Ventures in Reston, Va., is talking about start-up tech firms that are worth more than $1 billion and haven't even gone public yet. They're known in the tech business as unicorns for their supposed rarity.

Start-ups such as Snapchat Inc. in Venice and Uber Technologies Inc. in San Francisco have higher values than many Fortune 500 companies, but Backus said a few high-valued start-ups represent, at most, a "bit of a valuation bubble" among essentially sound businesses.

Plus, the entire venture capital business supporting the tech sector represents such a small slice of the financial landscape, he said, that even a total collapse wouldn't harm the broader economy as it did when the tech bubble of 2000 burst.

"We're over-focused as a country on unicorns," he said. "Even if we [venture capitalists] were totally stupid and it all went to zero, it wouldn't really move the needle."

The rise of a new class of American corporation -- start-ups with outrageously high values -- and an influx of venture capital money have stoked fears about whether an exuberant tech sector is overheating once again.

Shares of publicly traded technology companies are up nearly 13.5% in the last year through Friday, easily surpassing the broader Standard & Poor's 500 Index, which gained 7.7% in the period, according to FactSet Research Systems Inc.

Meanwhile, private markets continue to provide anecdotal evidence of even more dramatic gains. Uber's worth, for instance, jumped 119% in six months to $40 billion in December from $18.2 billion last June, according to Dow Jones Venture Source.

And the industry's latest initial public offering tended to justify the high private values. Wearable tech firm Fitbit Inc. in San Francisco...

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