The flurry of recent M&A deals in Silicon Valley, while attention-grabbing, is being seen by some entrepreneurs and venture capital investors as a sign portending trouble.
"There is so much money chasing early stage deals that bad news is around the corner," said Jeff Clavier, managing partner at SoftTech VC—though he expects the fallout to be limited to wealthy people and funds, at least at first.
Patrick Freuler, a former private equity investor turned CEO of start-up Audicus.com in New York City, agrees. "The danger is more when these valuations become the norm across the board and not just a subset of the tech world, and the next couple of months will show if we're headed in that direction," he said.
Whether or not the rest of the world heads in that direction, M&A in the tech sector has been on a tear.
According to Thomson Reuters, Facebook's $2 billion Oculus acquisition pushes tech M&A to its highest annual start since 2000—$70.1 billion during the first quarter in 2014, which is up a whopping 101 percent from the same period last year. (Facebook's eye-popping $19 billion purchase of What's App is the biggest tech deal so far this year.)
Not everyone thinks the buying frenzy is necessarily bad. Kulveer Taggar, CEO of Agent, a mobile app start-up, says massive start-up purchases by Google, Facebook and others are an indication that big tech knows how it needs to stay competitive—and buying start-ups can help achieve that.
"The big guys realize that new, multibillion-dollar markets can emerge and be won in the space of a few years. So they have to be quick, and very strategic with what they buy. A key acquisition may save them billions," said Taggar.