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Don't the late stage investors get hurt in these deals also? Why would they get in at such a high valuation?
Any other old-timers around that can name any?
Can anyone really say if there is any proof to this rhetoric. Are these companies really in such bad shape?
*edit: spelling
I remember being at Intel in 1999 when the share price was 72. six months later it was down around 18. There was one smart senior engineer there that had put options as insurance against all his shares. The rest in that group had to rethink retirement.
Any thoughts on which unicorns are more situated to "weather the storm" and which aren't?
Flipping through the list, my top 3 are Palantir, Spotify, and Zenefits. I think Uber or Airbnb will stay and become huge, but they might both be overvalued.
Based on that criteria, Uber & AirBnB should be on top of this list, followed by Palantir and Stripe. Zenefits has not really shown the type of defensible traction that Uber / AirBnB have (right now they are simply a rapidly growing insurance agent with a difficult-to-scale direct sales model). I would not add Spotify to this list - bad margins, and hard to defend against Google / Apple.
When I read old case studies like WebVan it is hard for me to believe in a bubble. I do think their valuations are too high, but they certainly aren't zero--more than half of the people I know have taken and Uber or Lyft more than once, for example.
Everyone I know uses Uber a lot
All the more reason to go public and have some liquidity in your shares. I remember being at Intel in 1999 when the share price was 72. six months later it was down around 18. There was one smart senior engineer there that had put options as insurance against all his shares. The rest in that group had to rethink retirement.
Not sure what the rules were at that time, but most public companies restrict you today from owning any derivatives in their stock.
I was pleasantly surprised by this article. I expected the usual 'the end is nigh, the bubble has popped, unicorns are screwed, we're all screwed' article. Instead, I was happy to find that it was about some of the ways that unicorns could or may have to protect employees, founders and early investors from down rounds. Purely as an educational experience, this article is certainly worth a read.
Any thoughts on which unicorns are more situated to "weather the storm" and which aren't?
Basically anyone at or near profitability can weather most storms
Earlier quoted context omitted.
The list of unicorns: https://www.cbinsights.com/research-unicorn-companies Would definitely love to see some analysts grade that list in terms of whether the current valuation is sustainable.
I wish I understood what it is about Evernote that makes it worth $2 billion, Dropbox $10 billion, or Nextdoor $1 billion. There aren't many companies on that list that have valuations I can understand.
For example, if DizruptrCo Inc, sold a 15% equity stake for 200 million, they are a unicorn "valued" at $1.333 billion.
How they come up values for X and Y are part of the VC fundraising black magic. What's being reported here and a lot of other places recently, however, is that VC investors are actually willing to put an abnormally high value on Y in late rounds, because liquidation preferences mean they are very unlikely to lose money. Founders also love this, because it means they get to join the Unicorn Club, hopefully on their way to the Three Comma Club.
This is whats meant by unicorn valuations being "inflated". As always, the people who get screwed the hardest if things go south is the employees. People are starting to figure out, however, that a down round, or really anything short of a spectacular exit, for an inflated unicorn means their options and equity are probably going to end up worthless. This could lead to all the best talent running for the door as fast as they can, death spiral, etc.