The New Silicon Valley Stock Exchange Is A Warning Sign For The Startup Bubble

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Loose global monetary policy led to an explosion of venture capital activity over the past several years:

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Trillions of dollars worth of central bank-created liquidity has been sloshing around the globe looking for a home and a portion of it found its way into unicorn companies that are worth billions of dollars each:

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Today’s unicorns are equivalent to dot-com companies in 1999 and will have the same fate, unfortunately. Though some of the unicorns will survive and become successful in the longer-run like Amazon and eBay, there is going to be a tremendous shakeout that is going to slash valuations and weed out the Pets.coms and Webvans. Thousands, if not tens of thousands, of tech startups, are going to fold when this bubble bursts. The abysmal performance of two recent high-profile unicorn IPOs, LYFT (down nearly 50% since its IPO) and UBER, may be a sign that air is starting to come out of the unicorn bubble. It will be interesting to see if the Long-Term Stock Exchange will be able to go live before the unicorn bubble bursts.

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