Unicorn (finance)

In the U.S. investment and venture-capital industry the term unicorn denotes a start-up company—originally and often software-focused,[1] but as of 2016 more inclusive of other sectors—whose valuation has exceeded the somewhat arbitrary value of $1 billion.[2] As of August 2015 the largest unicorns included Uber (transportation), Xiaomi (consumer electronics), Airbnb (lodging), Palantir (big data), and Snapchat (social media).[3] Canadian tech unicorns can appear as "narwhals",[4] and a new buzzword, "decacorn", has been reported for those companies over $10 billion, which include all of the foregoing five, as well as companies such as Dropbox and Pinterest.[5] For instance, as of October 2015, Uber was valued at US$51 billion.[3][6]

Aileen Lee of Cowboy Ventures made a thorough investigation of the concept of unicorns after that firm established a database of such unicorns to understand their financial, leadership, and technical characteristics.[1] VentureBeat reports 229 unicorns as of January 2016.[7]

Bill Gurley, a partner at Benchmark (as of October 2015), a venture capital (VC) firm that had invested in Instagram, Snapchat, and Uber,[6] as well as a VC investor with experience in previous economic downturns that affected Silicon Valley,[8] predicted in March 2015 and earlier that the rapid increase in the number of unicorns may presage what he has termed a "risk bubble" that will eventually burst, leaving in its wake what he terms "dead unicorns".[9]

References

  1. 1 2 Lee, Aileen (2013). "Welcome To The Unicorn Club: Learning From Billion-Dollar Startups". TechCrunch (online, November 2). Retrieved 26 December 2015. 39 companies belong to what we call the 'Unicorn Club' (by our definition, U.S.-based software companies started since 2003 and valued at over $1 billion by public or private market investors)... about .07 percent of venture-backed consumer and enterprise software startups.
  2. ↑ Griffith, Erin & Primack, Dan (2015). "The Age of Unicorns". Fortune (online, January 22). Retrieved 26 December 2015. Subtitle: The billion-dollar tech startup was supposed to be the stuff of myth. Now they seem to be... everywhere.
  3. 1 2 Roberts, Daniel & Nusca, Andrew (2015). "The Unicorn List". Fortune (online, August 15). Retrieved 26 December 2015.
  4. ↑ Truong, Alice (2015). "Canadian Tech Unicorns are Called 'Narwhals'". Quartz online (November 20). Retrieved 26 December 2015.
  5. ↑ Frier, Sarah & Newcomer, Eric (2015). "The Fuzzy, Insane Math That's Creating So Many Billion-Dollar Tech Companies". Bloomberg (online, March 17). Retrieved 26 December 2015. Subtitle: Startups achieve astronomical valuations in exchange for protecting new investors... Snapchat, the photo-messaging app raising cash at a $15 billion valuation, probably isn't actually worth more than Clorox or Campbell Soup. So where did investors come up with that enormous headline number?
  6. 1 2 Winkler, Rolfe (2015). "Bill Gurley Sees Silicon Valley on a Dangerous Path". The Wall Street Journal (online, October 26). Retrieved 26 December 2015. Subtitle: Subtitle: Venture capitalist says companies hurt themselves by trying to delay going public.(subscription required)
  7. ↑ Koetsier, John (19 January 2016). "There are now 229 unicorn startups, with $175B in funding and $1.3T valuation". venturebeat.com. VentureBeat. Retrieved 19 January 2016.
  8. ↑ Blodget, Henry (2008). "Tech: How To Survive Great Depression 2.0 Without Firing Everyone". Business Insider (online, October 17). Retrieved 26 December 2015. It seems every serious venture capital firm has now had a chat with its portfolio companies about how it[']s time to fire people... VC-extraordinaire Bill Gurley's Benchmark has had the same chat with its companies, but Bill tells peHUB that there's actually an alternative to canning half your company: Move to San Jose.
  9. ↑ Griffith, Erin (2015). "Bill Gurley Predicts 'Dead Unicorns' in Startup-Land this Year". Fortune (online, March 15). Retrieved 26 December 2015. Subtitle: A crash would affect more than just startups. ... Bill Gurley, the prominent investor behind Uber and Snapchat, has been sounding the tech bubble alarm for months now. He's preached about the dangerous appetite for risk in the market, the alarmingly high burn rates and the excess of capital sloshing around in Silicon Valley. At the South by Southwest Interactive festival in Austin, Texas, Gurley rang the alarm once again. We may not be in a tech bubble, the venture capitalist said, but we're in a risk bubble.
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