With hundreds of fledgling entrepreneurs ready to change the world and maybe make millions while they do it, the buzz around the microfinance industry looks a bit like the dot-com boom at the end of the ’90s.

Ashish Lakhanpal, founder and managing director of Kismet Capital LLC, remembers the run-up and bust of the Internet and other technology businesses back then and says what he is seeing in microfinance today gives him a bit of déjà vu.

“It smells and feels a lot like those days,” he said at a conference in New Delhi on money-raising for microfinance companies. “You see a whole sector that is being populated with new startups.”

The microfinance executives that would come to him asking for investments in the past were often from NGO or government backgrounds. Today, the new leaders tend to be from the banking sector. Their power-point presentations are slicker, the business plans more sophisticated and the suits more expensive, said Mr. Lakhanpal.

They also have high expectations for valuations for their often unprofitable businesses.

“There are a lot of egos, a lot of strong personalities,” that want to sell stakes in their companies for high prices but give up little control, said Monica Brand, principal director of the frontier investments group at Accion International. “It reminds me a lot of the dot-com bubble.”

Ms. Brand also remembers the silliness of Silicon Valley back then and says many of the new microfinance companies are trying to create new valuation measures to justify their prices just like Internet companies did in the ’90s.

They ask Accion and other investors to think of their growth rather than their price-to-book ratio, which is the standard measure for lenders. During the Internet bubble companies asked investors to look at the PEG ratio rather than the PE ratio, which added “growth to the traditional price-to-earnings ratio as a measure of value.

Whether this potential bubble will end like the dot com bubble — with most of the new startups disappearing — remains to be seen. Mr. Lakhanpal said any new company will have to have a very compelling and unique business model targeting new areas. He wonders whether many of the newbies will stay in the business if there is a big downturn: “If the market really hits the fan are they really going to stay and stick it out?”

The big established players, many headed by people that built the business for years before they knew there was any chance of listing on a stock exchange or making real money out of it, will often be the better bet.

“They were there before it was sexy and hot,” said Mr. Lakhanpal.

Both he and Ms. Brand spoke to India Real Time on the sidelines of “Microfinance: Cracking the Capital Markets South Asia 2010” conference in New Delhi.