Some of the highest-profile startups are stretching the very definition of tech.

Take Peloton Interactive, whose popular stationary bikes stream video workouts, which went public last month in an offering that initially valued its business at $8 billion. Peloton’s prospectus — the document a company uses to market their shares before going public — refers to “technology” more than 80 times and makes it clear that the company considers its tech focus critical to its current and future business model. It describes itself as “a technology company that meshes the physical and digital worlds.”

Then there is salad restaurant chain Sweetgreen, which WSJ Pro Venture Capital said was recently valued at $1.6 billion in part because of its smartphone app and other digital tools. That’s roughly four times the market cap of Del Taco, a fast-food restaurant with more than 500 locations. Sweetgreen has 96 restaurants.

The parent company of co-working spaces WeWork, We Co., was valued at $47 billion in January, but the firm ended its effort to go public. We Co.’s prospectus used the word “technology” more than 100 times.

Compare that to IWG, formerly known as Regus, which has provided co-working spaces for about 20 years longer than WeWork. It is also eyeing a possible stock market listing for its U.S. operations — but it is worth a possible $3.68 billion valuation. IWG had revenue of about $1.1 billion last year in the U.S., compared with $1.8 billion We Co. generated globally.

‘Be very skeptical’

Companies that might have identified themselves as part of the lower-growth fitness, food or real estate industries have tapped into the investors and funding traditionally accessible only to tech companies. The access to billions of dollars in potential venture funding affects how companies approach growth and profitability as well as how many people they employ.

“Every company is a technology company at this point,” said Venky Ganesan, a partner at technology investor Menlo Ventures, which invested in Uber (which he considers a tech company) and eyewear retailer Warby Parker (which he doesn’t consider tech). “People use the name as a way to goose up their value. Be very skeptical of people who are selling the [tech] moniker.”

Justine Moore, who works on direct-to-consumer and other investments at venture-capital firm CRV, also known as Charles River Ventures, said she has recently seen a stream of media and entertainment, real estate and direct-to-consumer organizations seeking funding as a tech company while providing little evidence they are one.

“It gets egregious when it’s someone selling a physical product through retail or Instagram, but in the long run, it’s data play,” said Moore.

The issue goes beyond semantics. Some investors worry that the slipperiness around tech terminology and valuations could contribute to an economic bubble.

Not living up to the hype

According to a recent Goldman Sachs report, only 26% of companies that completed an IPO in 2018 had positive net income in their first annual report. That is the lowest share since the first tech bubble burst around the turn of the millennium. And some of the most recent tech IPOs have slumped, suggesting that their venture valuations were too hyped. In their first day of trading, Peloton shares lost about 11% of their value, opening at $27 and closing at $25.76.

Sweetgreen’s tech-like $1.6 billion valuation came with investment from hedge funds and venture-capital firms, organizations that have traditionally ignored most businesses in the food sector. Sweetgreen CEO and founder Jonathan Neman said in a statement that the business doesn’t think of itself as a tech company, despite its focus on digital channels over the past few years.

Though several analysts and investors said they didn’t think of the tech vs. not-tech question in binary terms, they cited several qualities that differentiated tech companies from the rest of the crowd — and that many of the current tech startups are simply retailers, restaurants, real estate or fitness businesses, though technology is woven into nearly every business now.