The era of unicorns is over?
After the listing of Uber and Lyft, the global unicorn wave oscillated with the fall of the two stock prices, and then fell directly into the bubble on the beach after WeWork’s valuation was “two fold”.
Industry sources said that there are still 413 unicorn companies with a valuation of more than $1 billion, including some popular companies such as Airbnb and SpaceX. Although WeWork has fallen from the $47 billion valuation to the current $8 billion, it does not affect more small unicorns who continue to rush toward the IPO with the help of giants like Softbank.
In the “2019 Hurun Global Unicorn List” released by Hurun Research Institute at the end of October, there are 494 companies in the world. At the same time, Chinese unicorn companies surpassed the United States for the first time – reaching 206. There are 203 companies on the list in the United States, followed by India and the United Kingdom.
Some analysts point out that the golden age of the unicorn that has emerged over the past decade has come to an end in 2019. Then, the group of this round of unicorn aura is annihilated. Has anyone found out the reason? When will the next wave of “beasts” come again?
The faster the IPO, the better?
Whether it is four hundred or five hundred, they are all staged goals of listing. However, although some unicorns have skipped the door of IPOs, including Snapchat, Uber, Lyft, Spotify, Pinterest, Peloton, Beyond Meat and Slack (WORK), they are now more or less lame (after listing) The stock price plummeted).
The source of the ebb tide comes first from the other side of the ocean. The performance of these companies after the public offering has surprised many investors in the secondary market, even losing the principal. But there are still some investors who have peace of mind, they are VCs in Silicon Valley.
Critics point out that the production of unicorns and the sudden collective decline have a lot to do with these “elites”. “They didn’t suffer huge losses. Now they still carry Stanford’s aura, wearing a Patagonia fleece vest and a $10,000 Pinarello bicycle, riding along the dune road in Palo Alto or Camping,” one critics commented.
Of course, many angel investors risk the investment of their own funds, and many of their “bets” have not been successful. They are the first wave of “pushing hands” in the wave of blessings. More powerful investment institutions are reviewing the surge of this wave and continue to pay attention to the next cycle.
The valleys in Silicon Valley that create unicorns are traceable. Since the 1970s, such tides and tides have followed a certain pattern and pulsated. At the time, early venture capital firms like Kleiner Perkins and Sequoia Capital began investing in startups such as Apple, Oracle, Cisco, and Google. Venture capitalists have provided several rounds of financing for these companies, and then these companies publicly issue shares, and then ordinary shareholders start buying and selling to earn income.
But it is different now. Start-ups are getting shorter and shorter from angels to IPOs, they will absorb billions of dollars in investment and quickly become unicorns.
The problem may be here.
A few recent examples can be seen that some of the rapid IPO unicorns are ripened by capital. In order to achieve the goal of realizing after the IPO, the bubble is constantly being blown up during the financing period.
Some unicorns seem to hold the top of a certain market share, but with the imbalance of their own development and the management, operation, business model, the vulnerability will be quickly exposed after the IPO. They are either burdened with huge losses (and long-term existence); or the governance structure is worrying (making public shareholders have no voting control or governance). Once the internal documents are disclosed, the outside world will even see many suspicious market transactions (not specifically WeWork).
The bloodshed without a profitable prospect has already made the public see more of the truth behind “illusion.”
As Nasdaq’s former CEO Robert Grayfield exemplified in a blog post: “WeWork’s suspension of IPOs is a sign of the end of the current unicorn bubble. This anticipatory-based growth philosophy undermines maintenance. The profit matrix required by a company.” Grayfield emphasized that the reason for the bubble is that investors once valued expected growth and even more important than profit.
Case: “Capital Game” behind Uber
Back to the unicorn who has already succeeded in IPO, let us take a look at “beast”The capital stories in the process.
Uber’s financing history is indeed a wonderful sample of capital making investment aura, growth expectations far better than profit base. From its inception in 2009 to its initial public offering in May this year, Ube conducted an amazing 24 rounds of financing (including a $200,000 seed investment by co-founders Travis Kalanick and Garrett Camp).
A research report shows that investment institutions and individuals from all over the world have been crazy involved in the process of blowing up the bubble during this period. Among them, many well-known venture capital companies and big names in Silicon Valley appeared in the early investment round. Including Sean Fanning, Chris Sacca, Mitch Kapor, Jeremy Stoppelman, Jason Karakanis (Jason Calacanis), Gary Vaynerchuck, Zack Bogue, Alfred Lin, Troy Carter, Jeff Bezos ) and other investment and technology companies, as well as Sequoia Capital, Benchmark, Menlo and many other venture capital institutions.
It is said that players who have no personal connections are simply unable to enter the game at this time, and there is no money.
After the early VCs flocked, the investors who followed came on Wall Street. These include Goldman Sachs, Fidelity, BlackRock and Wellington, followed by international investors such as Saudi Arabia and Softbank, as well as industry giants such as Microsoft and Toyota.
The final ranking is PayPal, which invested $500 million in Uber for a $78 billion valuation. Today, Uber’s market capitalization is $48 billion, and this investment has shrunk. But PayPal is not the only shrinking investor. Some analysts pointed out that the last 11 rounds of the 23 rounds of investment may be all losses, including Tata, Tencent and Axel Springer.
Venture investment company AndersonBen Horowitz, co-founder of Horowitz, pointed out: “The current IPO environment deprives ordinary investors of the opportunity for wealth growth, and gives it all to a small group of people. The bubble has been revealed after the IPO, which is a terrible problem.”
A part of the elites finished the soup, and the rest is the dregs. The late investment institutions and investors are likely to drink the wreckage.
After the IPO, the shares of Uber and Lyft (LYFT) have fallen sharply. Uber’s trading price was at least 36% lower than the issue price; Slack (WORK)’s trading price was also lower than its issue price, and Lyft’s share price fell more than 48%.
In addition, the popular African e-commerce company Jumia and the social media platform Pinterest are also after the IPO. According to public data, in the entire trading month of October, Jumia fell 18.66%, and Pinterest fell 5%. To give another example of our side, the “light speed” IPO’s Rising Coffee issue price is $17, but the IPO fell below the issue price four days later, and then fell to a low of $13.71. Rui Xing, who is currently trading at $18 to $19, will also end the lock-up period on November 13. The market outlook may be unpredictable.
When will the next gold and bubble period come?
In 2019, as an important year for the end of the golden age of unicorns, there was some similarity to the collapse of the dot-com bubble in 2000.
In 2000, when the dot-com bubble burst suddenly, the capital market also fell into a state of madness. At the time, star companies like Pets.com, Webvan and Boo.com were not spared, and the stocks of Amazon (AMZN) and Nvidia (NVDA) also suffered a sharp fall.
However, with the torment of the bubble period, gold always shines (although only a few). Since 2000, AMZN and NVDA’s share price have risen by 1,838.6% and 4,625% respectively, and Apple’s share price increase is even more staggering.
Of course, the current situation has some special features. For example, in the current world’s more than 400 unicorn companies, some non-risk Wall Street companies have flooded into the venture capital market, and these funds have only recently appeared in the public. Public data shows that