NEW YORK ( TheStreet) -- 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.
Groupon is the market leader in the crowded daily deals space.

"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."

From photo sharing apps ( Instagram, Color), to Q&A sites ( Quora and location-based mobile services ( Foursquare, Gowalla), the sheer number of new start-ups launching each day can be dizzying to even the most tech savvy consumer.

The rise of so many new companies is being driven in large part by an improved fundraising environment and the need for venture firms to 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."

This flood of investment has, in turn, created a so-called "solar system effect," where "one bright shining star pops up and all of these tiny companies around it are trying to differentiate themselves," said Bianchini.

The success of Groupon, for example, has resulted in hundreds of smaller competitors who want a slice of the lucrative daily deals space but struggle to cut through the noise.

Kevin Ryan, the CEO of flash sales site Gilt Groupe, said his company became the U.S. market leader by moving "really really quickly" and taking risks. New York-based Gilt announced this week it has raised $138 million in venture funding at a $1 billion valuation.

-- Written by Olivia Oran in New York.

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