I don't disagree that the valuation stretches credulity, perhaps past the breaking point. The narrative of the 'old bubble' was hyperinvestment by retail investors and mutual funds in unsustainable technology visions. The only thing 'wrong' about that old bubble, was that people who didn't know any better lost their money. Sometimes because their cousin or grandchild said they should put their savings bonds into tech stocks, sometimes because an aggressive fund manager put in more risk than they bargained for. Either way, people who didn't know better got hurt. In this hypervaluation the people at risk are investment bankers that do know better, and if they lose all their money, then fine. That was the bet they made. To use a gambling colloquialism, "Nobody cries for the roulette player that puts it all on 13 black."

I don't necessarily agree that markets "exist" to allocate capital efficiently, I would agree they exist so that capital can be allocated. When the market is fair, capital is pretty efficient allocated, but the private financing market is not fair on at least two axes, there are artificially high barriers to creating new goods (startups in this case), and information is not evenly distributed amongst all parties. That does put a crimp on the efficiency of their operation.