You can add Hany Nada, founder of venture capital firm GGV Capital, to the list of experts who see frothiness in the valuations of young technology companies.
"Overall there's a valuation bubble," he told CNBC. "The average valuation is already two times higher than it should be." But there is a bright side, he said.
"Within that there are some unicorns that are actually undervalued. Take a look at companies that are truly disruptive, companies that are outperforming expectations. I think they're still undervalued. It's hard to find the wheat from the chaff."
Another point to keep in mind is that many businesses are generating substantial revenue, and in some cases, profits. "Businesses are doing very well," Nada said. "It's not like 1999, when there were some crap businesses that would go away."
The eagerness of investors is what's pushing valuations higher, he said.
Nada expects the lofty valuations to continue sparking merger activity for both large and small tech companies next year.
To be sure, venture capital invested in the third quarter dropped 20 percent in the third quarter to $11 billion from $13.8 billion in the second quarter, according to VentureSource.
To be sure, venture capital invested in the third quarter dropped 20 percent in the third quarter to $11 billion from $13.8 billion in the second quarter, according to VentureSource, though that was still the second strongest quarter since 2001.
"It could be that the air is coming out of the tech bubble, if ever so slightly," writes Jeremy Quittner of Inc. magazine
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