The £100bn value being placed on Uber is high enough reduce even the most talkative cab driver to stunned silence.

Yet this eye-watering sum is hardly seems out of place in Silicon Valley. In April 2019 rival taxi tech firm Lyft was valued  $23bn following its IPO, while Pinterest topped $10bn.

Uber's IPO in May is likely to be followed by Slack, Airbnb, Palantir and many other technology start ups later this year. There are around 100 Unicorns and a significant number are expected to follow.

Astronomic valuations are popular in Silicon Valley, but how are they calculated and what do they reflect? Is there any science or rationale upon which to base the values, or are they purely hype on the part of those standing to benefit most? This would include early investors, the board and investment bank advisors promoting the offers.

In reality there is surprisingly little real evidence supporting valuations. It is almost impossible to establish a relationship between the underlying data and the valuation.

The main influences are a clear resonant vision and rapid user growth. Investors also need a clear exit plan such as a listing to exit at the right time for them. For most investors without this there is little point in the investment.

Many believe that liquidity will tighten towards the end of 2019 with rising interest rates. This may then curtail the appetite for IPOs. Investor fatigue is also possible, particularly if a number of the technology IPOs fall below their initial price. These factors have precipitated the current rush of technology IPOs at abnormally early stages of development.

The vision normally sketches out how the future is going to be different and the benefit to the business. Therefore Uber and Lyft are suggesting that urban dwellers will not need to own a car with access to their cheap responsive vehicles.

Somehow the introduction of autonomous vehicles will also benefit the taxi hailing businesses. This could be some way off and predicting the future over such a long time period is fraught with risk.

Airbnb facilitates income generation from spare rooms, and so on. The real vision for most technology platforms is to create network effects and emulate Facebook, Amazon or Google.

Network effects occur when each additional customer creates benefits for the suppliers and vice versa. As for user growth this may be measured in a variety of ways, for example return customers and frequent users. Growth trajectory is important. User growth forecasts are made which do have some relationship to the valuation at IPO and beyond.

However there is little mention of switching costs. Business models with low switching costs can gain users rapidly through low pricing, but lose them to someone else equally rapidly with the offer of a better proposition. So take taxi ride hailing - Uber has burnt $12Bn of cash in the last 4 years by incentivising drivers through bonuses and remuneration and offering customers cheap taxi rides.

At some stage investors will tire of funding these incentives. So prices will need to go up and driver incentives will need to be withdrawn. Both customers and drivers may then choose to go elsewhere. Most taxi firms have their own apps, as there is no proprietary technology involved. Uber’s growth has slowed rapidly during 2018. In turn cash burn has increased during the year as they attempt to maintain the critical user growth trajectory ahead of the IPO. Does the ride hailing model really work if profits are to be made?

Although unspoken, following the dot.com crash of 2000, the rate of cash burn is taken as a sign of creating rapid market positions and progress. Indeed the current batch of technology startup IPOs is at a much earlier stage than previous IPOs.

The cash loss rates are much higher in the rush to market before investor fatigue sets in. Uber lost $3Bn operating profit in 2018 whilst Lyft lost $900M and both admit to being some distance from making a profit. In effect they are not even attempting to predict when they may become profitable.

The key issue for investors is whether IPOs allow new investors to make a profit through subsequent increasing share price. If they are priced too high such as Snap Inc and Lyft then new investors are looking at losses.

Snap is down 60% on its IPO whilst Lyft is already down 16%. Ultimately it is possible that both Uber and Lyft may be worth very little. There is little real evidence that they have any long term value.

Diminishing user growth whilst attempting to mitigate losses is a cause for concern. Valuations are almost entirely speculative and supported by little more than the trajectory of sales and user growth funded by an enormous cash burn. Other technology IPOs this year may have some value but there are significant doubts as to what that might be.

In short most of these IPOs are about finding someone to buy the investment at a greater price than any real fundamental justification.