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With a recent spur of startup acquisitions – Adobe buying out Magento, Workday acquiring Adaptive Insights, and Microsoft purchasing popular open-software host Github – the tech sector is clearly riding high. But after a serious of cautionary tales, where highly-valued startups Theranos and Outcome Health were revealed to be frauds, the current acquisitions frenzy begs the question: are investors seeing all the warnings signs of a bad investment?

Theranos and Outcome Health are paragons of the “hype before the fall” phenomenon. Worth $9 billion at its peak, Theranos crashed to nothing in 2015, after the Wall Street Journal exposed the company’s blood testing technology as no more than a pipe dream. Rather than using its “revolutionary” Edison system, Theranos would routinely use traditional Siemens machines for conducting blood tests, effectively deceiving investors, doctors and patients about the usefulness of its blood-testing device.

In a similar vein, Outcome Health was sued by investors for defrauding them out of nearly $500 million. Providing advertisement services aimed at patients, employees are alleged to have overstated advertisement effectiveness and charged pharma companies for more ads than actually placed. Although a settlement with Goldman Sachs, Google and Alphabet – Outcome’s main investors – was eventually reached, the company’s reputation took a severe hit, and it’s doubtful the startup will ever reach a valuation of $5.5 ever again.

These cases demonstrate how investors are easily blinded by high-strung promises made by startups’ charismatic founders. And it raises the question whether the rapid acquisition of ascending firms is really worth the money. After all, industry analysts have recently determined that many “unicorns” – startups valued at $1 billion – are overvalued by about 50 percent. The National Bureau of Economic Research study looked at 153 unicorns and determined that 65 would be more appropriately valued at less than $1 billion. The study concludes that “Billion-dollar start-up valuations are not an indicator of safety. They represent a huge danger of widespread overvaluation.”

Many unicorns are consequently severely underperforming despite their valuation, or are even found to be frauds. As a result, they are either forced to scale down or go out of business following the initial blaze, exposing the arbitrary metrics on which VC investors base their investment decisions. Furthermore, the massive influx of funds can cause startups to change direction, shifting their focus from creating a convincing product to simply pleasing investors instead. Such a shift may push the company to tackle fields in which it cannot compete. These effects are particularly well documented in Sprinklr and Jawbone, founded in 2009 and 1999 respectively.

While in a proprietary dispute with competitor Opal over allegedly stealing technology, Sprinklr’s decision to launch new products outside its core area of expertise has not lived up to expectations. Sprinklr traditionally managed social media advertisement spend for major companies and achieved unicorn status after a 2015 funding round increased its valuation to $1.8 billion in 2016.

But in early 2017, Sprinklr pushed into the field of customer experience management with a product duplicating – rather than disrupting – that of a better-established competitor, Adobe. Many of the pieces of Sprinklr’s Experience Cloud, a marketing management platform, came from acquisitions and were found to be similar to Adobe’s own “Experience Cloud” launched only weeks prior.

And stakeholders should take note because a memorable and highly pertinent example exists of what can happen when a company begins to overreach: Jawbone, once a consumer electronics company pioneering Bluetooth audio technology, is now considered a telltale in overreach fueled by overvaluation.

Despite a valuation of $3.2 billion in 2014, the company still had not earned any money almost two decades after its creation, and was notorious for releasing its products late and without the promised features. But encouraged by a $900 million fundraiser, Jawbone diverged from its traditional sector to enter into the “wearables” market. Being force-fed capital it should not have received convinced its leadership they could defy a new market in which they had no experience. The subsequent crash reduced its value to nothing, proving that overconfidence comes before the fall.

As it turns out, of all the companies that recently acquired new assets, Microsoft may be facing this problem in the near future. The tech giant’s acquisition of popular open-software host Github led some experts of the tech industry to raise their eyebrows. After all, Microsoft agreed to pay $7.5 billion for the startup, despite its most recent valuation of roughly $2 billion.

But perhaps more worrisome is the brewing discontent of Github’s main clientele – open-source developers. They have been frustrated with Github’s lack of communication when creating issues and accuse the firm of breaking its own contribution guidelines when dealing with developer requests. They consequently left the platform in droves, migrating tens of thousands of projects to competitors GitLab and BitBucket

What all this means is that investors, customers and partners of high-value startups should carefully scrutinize their service provider even if they appear on the up and up. The inflation of a company’s value beyond its real worth shows that many expectations ultimately cannot be met – with massive losses to both investors and costumers. Every so often, the supposed unicorn turns out to be nothing more than a glorified horse with a party hat on.