The competition for hot deals in New York has been pushing up startup valuations and some investors are ready to see some bubbles pop, according to CNN.

An impressive list of high-profile investors see bubbles inflating in New York: Chris Dixon, angel investor and co-founder of Hunch.com, angel investor and Wine Library TV host Gary Vaynerchuck, TechStars director David Tisch, Fred Wilson of Union Square Ventures and Lawrence Lenihan, managing director of New York-based FirstMark Capital.

Most seem to hope the imbalance will start to correct itself.

"My prediction of what will happen is that there could be a meltdown in the New York tech scene," Lenihan told CNN."But it's like a forest fire: It's good, it clears out the dead wood."

The risk of a bubble is limited to angel and venture capital investors, in contrast to the dot-com burst where startups were going public and spreading risk throughout the system.

The current bubble is dangerous for two reasons, investors said.

They "disrupt market Darwinism," CNN says, which happens in a few ways. A bubble could mean entrepreneuers who don't deserve funding are getting it, for example, or that companies that would have succeeded with less money might be encouraged to grow too fast and flame out.

A spectacular bubble burst could also put the freeze on tech investing for years.

That's why investors would prefer to see some little bubbles pop—a company here or there—rather than a system-wide explosion.

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