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Freshly Minted Unicorns Now a Rare Sighting In Silicon Valley (qz.com)
An anonymous reader shares a Quartz report: Unicorns, start-up companies valued at over $1 billion each, once a rare sighting for investors, have frolicked across Silicon Valley of late. Now the market seems to be yanking on the reins. Venture capital research firm CB Insights reports the number of venture-backed startups achieving a $1 billion or more valuation ground to a halt over the last six months. In the first quarter of 2016, only five new unicorns arrived. That's compared to an average of about 20 per quarter last year. The number of startups worth at least $1 billion has doubled since 2015 to more than 160, says CB Insights. At the same time, the number of such companies accepting "down rounds" or exits with lower valuations is now up. That number exceeded the quantity of new unicorns being created starting in the last quarter of 2015.
Somebody 'invent' a new chat service!
Gotta keep that bubble growing!
What's this term "unicorn" in this context? Obviously not a mythical horse with a horn. Make it your habit to explain inside terms and acronyms when submitting summaries, please.
The number of startups worth at least $1 billion has doubled since 2015...At the same time, the number of such companies accepting "down rounds" or exits with lower valuations is now up
Some venture capitalist making a long-shot bet on a start-up doesn't make the company "worth" anything. Valuation is a completely meaningless term in the absence of revenue and net profit to support it.
For those old enough to remember Bubble 1.0, Bubble 2.0 is lasting a lot longer. The effects are still the same:
- Massive over-emphasis of the importance of advertising and data-mining
- San Francisco / SV housing market distortion taken to a whole new level (no NYC this time though)
- Investments in crazy companies/ideas, although it's a little more grounded in reality this time
- Loss of talent to social media companies, same as during the stock bubble when the investment banks grabbed all the smart people
The thing that appears to be different is not as many IPOs - the strategy now seems to get bought by Facebook, Google, Microsoft or some other company and cash out that way. I'm all for innovation and stuff, but when absolutely every new startup is "Tinder for nurses" or "Airbnb for pilots" or yet another iteration on an app that's easy to push ads through on a smartphone, there's a bubble afoot.
One thing that's keeping these unicorns alive that didn't exist the first time around is The Cloud and "DevOps" as far as IT is concerned. Bubble 1.0 meant massive build-outs of networks and data centers, and therefore a huge pile of eBay trinkets after it popped. Now, every new company is just using a credit card to buy AWS or Azure time month to month and can survive much longer on a VC investment.