Entrepreneurs Bemoan Flood of Tech Startups

The rise of billion-dollar valuations for marquee name companies like Facebook and Groupon has led to the inevitable question: Are we in the midst of a tech bubble?

Entrepreneurs at Business Insider’s Startup 2011 conference held Tuesday in New York expressed some trepidation about the current environment, voicing concern about the implications of too much money and too many companies flooding the market.

From photo sharing apps (InstagramColor), to Q&A sites (Quora and location-based mobile services (FoursquareGowalla), the sheer number of new start-ups launching each day can be dizzying to even the most tech savvy consumer.”I’m not concerned with whether or not this is a bubble … the real concern is what’s happening to people,” said Gina Bianchini, the former CEO of social network Ning. “[Even] early adopters are numb to new companies at this point and overwhelmed with the number of things they’re supposed to do within a given day across mobile and social technologies.”

The rise of so many new companies is being driven in large part by an improved fundraising environment and the need for venture firms put those dollars to work. U.S. venture funds raised more than $7 billion in the first quarter of 2011, up 76% from the year-ago period, according to the National Venture Capital Association.

“If you’re a venture investor, maybe you’re not overpaying for one company but there are 20 you’re overpaying for because they’re going to fail,” said Esther Dyson, a board member in several high profile start-ups including Meetup and Eventful. “We’ve got too much money going into too many deals.”

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