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With investors pulling their money out of Groupon, Facebook, and Zynga, one might be tempted to call this tech bubble burst, but other Internet start-ups have caught the attention of the venture capital world, keeping this thing going. Since its sad run on the market big VCs like Marc Andreessen, have either completely pulled or drastically reduced their holdings in the daily deals site, reports The Wall Street Journal's Shayndi Raice and Shira Ovide. Groupon is now trading at less than $5 per share, a more than 75 percent drop in value since it went public in November 2011, losing about $10 billion of market value. In those same months, Facebook has yet to impress and Zynga has done worse. This all sounds a lot like something investors have seen before, explain Ovide and Raice. "Groupon's plunging stock price, and the swooning shares of Facebook Inc. and Zynga Inc. have rekindled memories of the dot-com bust in 2000 ... their results aren't matching early expectations," they write. And, we wouldn't disagree, calling the bubble droopy when Facebook debuted on the market, but the venture capitalists, at least, haven't given up in the Internet just yet.

While Groupon flails as a public company, Pinterest has attracted money from some of these same venture capitalists, according to another Wall Street Journal report. The company got a $100 million funding round in May from a group of investors, including Andreesen's firm, Andreesen Horowitz. Like Facebook and Groupon before it, Pinterest has yet to prove it has a legitimate business strategy. Facebook's advertising model has yet prove itself and some have called Groupon nothing more than a ponzi scheme. Pinterest, too, has admitted that it doesn't yet know how to turn its big audience into a lucrative operation. Yet, the site's link to online shopping has investors convinced enough to dole out the money. And so, the bubble continues to inflate.

Or, is Pinterest just a winner of this decade's tech frenzy? Following the Internet speculation of the '90s, some companies came out okay after it all exploded. Take Amazon, for example, which made it out intact and has since grown to dominate the online shopping space. Perhaps Pinterest is the right kind of start-up, these days. Unlike Facebook and Groupon, it does have a concrete connection to something money making, connecting social networking to e-commerce. And, apparently, it works. "Pinterest drives more traffic to Williams-Sonoma and Martha Stewart Living than Facebook and Google combined," Patrick Chung, a partner at  New Enterprise Associates told The Journal's Matthew Wong

Still, Pinterest hasn't indicated it can make the leap from hot start-up to real company. And, throwing money at these not yet mature companies is part of what sets them up for failure. "Groupon would never have gotten this big without that late-stage money," Bill Gurley, a general partner at venture-capital firm Benchmark Capital, told Raice and Ovide. It's not investor interest that kills these companies, but the over-hype that causes them to crash later. Over-hype is the definition of an economic bubble, as we learned from The New York Times during LinkedIn's IPO. And look what it's done to Groupon, and now Facebook and Zynga, which all fell sharply in their first days on the market. It's possible that Pinterest will be the exception. But, for now, it just looks like another Internet fad of the moment -- the start-up that has caught the eyes of the investors who no longer like the looks of their previous investments. 

This article is from the archive of our partner The Wire.

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