Freshly Minted Unicorns Now a Rare Sighting In Silicon Valley (qz.com) 89
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.
Quick... (Score:4, Insightful)
Somebody 'invent' a new chat service!
Gotta keep that bubble growing!
Re:Quick... (Score:4, Interesting)
bubble
Shhh its not to be called like that until it bursts!
But really, if giants like calr icahn sell [theguardian.com] off their stocks, the burst is not far away, isn't it.
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To be fair, Icahn sold off his Apple stock only partially because of the last quarterly report. The rest of the reason involves the fact that he was not getting his way with the Board.
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I think their words were "Happy International Women's Day", and he started yelling his safe word, which happens to be "Sell!"
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To be fair, Icahn sold off his Apple stock only partially because of the last quarterly report. The rest of the reason involves the fact that he was not getting his way with the Board.
Icahn also sold off Apple (AAPL) because he realized that no one fell for... believed that Apple was worth $1.4 Trillion ($240 a share). While the iPhone and other Apple products continue to sell, the lack of innovative products limits the upside. I think that it was more this than lack of traction with the Board.
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Icahn is a grumpy old man though. If a company he invested in doesn't make him enough money he sues it. Most of the rest of us instead say "you win some, you lose some."
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And he is rich, and you aren't.
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Doesn't mean he's right though. He's dumping on Apple not because he necessarily thinks Apple is going to tank, but because Apple isn't giving him enough control on the board.
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That is something to keep in mind whenever someone starts ranting about "welfare queens" or defending our aristocracy.
I can't wait for this bubble to burst. (Score:3, Insightful)
I can't wait for the current bubble to burst. It has been the worst thing to happen to the computing industry in a long time, and it hasn't been good for society at large, either.
These days the computing industry is merely just an extension of the marketing/advertising industry. An insane amount of effort and talent has been put into collecting private information as aggressively as possible, and then using that to force highly-targeted advertisements on as many people as possible as often as possible. Soci
Grandpa needs his meds (Score:1)
This post would have been better if completed with a couple "get off my lawn you young whippersnappers" spliced in somewhere. I'm still looking for a generation that didn't think the next generation was screwing up everything.
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The first dot-com bubble at least brought us all some benefits, such as the widespread availability of the web.
The availability of the web began in 1995. It would have happened whether or not people threw money at startups with business plans written on napkins in 1999, 2000 and 2001.
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Nah, it isn't the bubble that's damaged SF. It's the government of SF which has made it possible.
mythical anyway (Score:5, Insightful)
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.
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Re:mythical anyway (Score:4, Informative)
Make it your habit to explain inside terms and acronyms when submitting summaries, please.
A unicorn in venture capital is a company that reaches $1B in valuation, either in the run up to and/or after the IPO.
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And, like the unicorn of mythology, the valuation is fictional.
Re:mythical anyway (Score:4, Funny)
What's this term "unicorn" in this quote>context? Obviously not a mythical horse with a horn. Make it your habit to explain inside terms and acronyms when submitting summaries, please.
Furthermore, what's the significance of the first word in TFS ("unicorns") being underlined and a different color?
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A "unicorn" a delusion from licking too many hallucinogenic frogs in Silly-cone Valley.
That's Santa Cruz. You may have better delusions by licking the banana slug instead.
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I actually think linking to the wikipedia page is the correct way to handle this, it doesn't bog down those that know the term.
Though maybe it was edited, because it's defined in the sentence now too.
u r dumb. (Score:2)
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.
God, you are dumb. WTF is wrong with you? The bloody definition is right there in the first motherfraking sentence. Let me quote it and put in bold for you. I could try to spell it with kindergarten letter cubes while singing a Barnie's or Elmo's song, but I am not sure if that would register through that dumb skull of yours.
Unicorns, start-up companies valued at over $1 billion each, once a rare sighting for investors, have frolicked across Silicon Valley of late.
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Not the mythical beast / carraige configuration (Score:3)
For those not in venture capital circles:
WTF is a Unicorn? (Score:5, Informative)
https://en.wikipedia.org/wiki/Unicorn_(finance) [wikipedia.org]
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Look at something like Twitter which was one of those companies and had a huge IPO valuing the company at tens of billions of dollars. They've never really been able to make money and the stock has continued to dwindle over the months. Many of the unicorns are like this, valued far in excess of what they can actually hope to profit. Everyone thinks they're buying the next G
Thank God, who cares (Score:3, Insightful)
The world needs fewer Facebooks, Twitters, Ubers and Tinders, not more. Let them all die.
Re:Thank God, who cares (Score:4, Funny)
Fragmentation is a pain. What it needs is something that rolls all of them together. That thing is systemd.
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Is systemd the one daemon to rule them all?
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I'm confused by this summay (Score:2)
it was always a bubble, one long bubble sense 1999 (Score:2)
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Amazon, ebay, Angies list, Shuterfly, Netflix, Priceline, they're all still around
Just in case (Score:5, Funny)
In case anybody's wondering what a unicorn is (the summary doesn't make it clear), a unicorn is a bisexual person, usually but not always female, who is willing to engage in sexual activities with a couple, without demanding or doing anything that might cause problems or inconvenience to the couple.
Newsflash! (Score:4, Insightful)
Most startups valued at over $1 billion aren't really worth $1 billion.
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Not really a news flash to anyone.
Most companies, not just startups, valued at a billion, aren't. There are only about 2000 companies in the world that can turn that profit.
VC Valuation != Worth (Score:5, Insightful)
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.
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Something is worth what people are willing to spend on it (at least, in our economic system.) Normally a business might be evaluated on what it can make (revenue and profit). But that's not always that case.
And if people are willing to buy 10% of something for 100M, then I think you can make the excellent case it is worth 1B (Well, I think you can make an excellent case it is worth something close to that.)
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Warren Buffet [investopedia.com] would disagree. But then, what does he know about investing?
What part of what he said disagrees with Warren's viewpoints in the article you linked to? Warren tries to estimate the company's intrinsic value, which is not bound to the net profit or revenue of the company today. While I certainly agree he is more risk adverse than your average VC, which is probably a good thing, but he certainly is not bound to simplistic measures of a company's worth.
I don't think Warren would invest in a company with virtually no book value but a much higher market value, but that do
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You say that like you're explaining something, when you're really just illustrating the problem.
Not legally worth a billion (Score:5, Informative)
Most unicorns aren't. Think of the following car analogy deal. Suppose I sell you car for $10K, but we add a clause saying "a long time ago I lost a valuable engagement ring in the car. If found the sales price goes up to $100K".
Would you think it legit if I were then to turn around and issue a press release announcing that I just sold you car for $100K?
Similarly with unicorns nowadays, presently they all have this clause that if their business turns out not to be very successful (which is the case in 9 out of 10 startups) the VC ends up owning the whole thing and hence the price was actual cash exchanged (usually around $200-400 million). Then there is a clause saying that in the unlikely event that the company turns out to be wildly successful (i.e. the ring is found), then said $200-400M gets the VC only 20%-40% of the company.
Companies have announced these deals via press release declaring themselves to be worth a billion dollars and thus a unicorn. This is a misrepresentation of the facts, and indeed if the company had to be valued, say for the purposes of a divorce (not that this happened to me :p ), the probabilities of each outcome would be considered and the company would be given a sub-unicorn valuation.
Re:Not legally worth a billion (Score:4, Funny)
Your problem is that you are trying to apply horse sense to unicorns.
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You don't get it. The contract says that if it turns out the car is overvalued (which in this case is the likeliest scenario) then you get to own a whole more of it. So no, effectively you didn't pay $2K for 20%, in all probability you paid $2K for 80%.
Top of the social mobile IoT cloud bubble, finally (Score:5, Insightful)
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.
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[...] the strategy now seems to get bought by Facebook, Google, Microsoft or some other company and cash out that way.
That strategy haven't changed at all since the dot com bust. Except this time around the focus is to build a new app and get bought out by Facebook.
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I think the another factor that is keeping this going for longer is that unlike the first dot-com boom, everybody has computing power and network access. In the first dot-com crash, it quickly became clear that access to the internet outside of SV was very small, and fewer people even had PCs (outside of work) than expected, and it all fell apart with only a few left with the funding and user base to continue on.
It did spark this next bubble though. There was such a massive investment in networking infrastr
Meaningless valuations (Score:3, Insightful)
Here's what makes a company a "unicorn".
Some not-too-bright VC agrees to put $10 millions in for a 1% stake. The company now gets "valued" at $1 billion.
Truth is, until you find somebody willing to buy the company for a billion dollars, it isn't worth a billion dollars.
The stock market logic that consists in pretending that every share of a company is worth what the last buyer paid for his is a total fantasy.
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Unicorns not as rare as I might think. (Score:5, Funny)
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The next great Gold Rush? (Score:2)
Well it was a hell of a ride from the early 90's over the past 20+ years.
We've had a series of landscape changes from the PC era through the internet era and the recent smart phone era.
The tectonic plates of technology seem to have stopped moving for now.
As PC's became boring commodities so too are smart phones, the app gold rush is over.
This weeks results for Apple are a clear indicator of that.
Same happen to Cisco back around the turn of the millennium, the switch and router market matured and Cisco's st
wtfy (Score:1)
LSD (Score:1)