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[NB: A unicorn "is a privately held startup company valued at over $1 billion." --Ed.]
Submitted via IRC for Runaway1956
In case you missed it, the peak in the tech unicorn bubble already has been reached. And it's going to be all downhill from here. Massive losses are coming in venture capital-funded start-ups that are, in some cases, as much as 50 percent overvalued.
The age of the unicorn likely peaked a few years ago. In 2014 there were 42 new unicorns in the United States; in 2015 there were 43. The unicorn market hasn't reached that number again. In 2017, 33 new U.S. companies achieved unicorn status from a total of 53 globally. This year there have been 11 new unicorns, according to PitchBook data as of May 15, but these numbers tend to move around, and I believe the 279 unicorns recorded globally in late February by TechCrunch was the peak, where the start-up bubble was stretched to its limit.
A recent study by the National Bureau of Economic Research concludes that, on average, unicorns are roughly 50 percent overvalued. The research, conducted by Will Gornall at the University of British Columbia and Ilya Strebulaev of Stanford, examined 135 unicorns. Of those 135, the researchers estimate that nearly half, or 65, should be more fairly valued at less than $1 billion.
In 1999 the average life of a tech company before it went public was four years. Today it is 11 years. The new dynamic is the increased amount of private capital available to unicorns. Investors new to the VC game, including hedge funds and mutual funds, came in when the Jobs Act started to get rid of investor protections in 2012, because there were fewer IPOs occurring.
These investors focus on growing the unicorn customer base, not turning a profit. New regulatory conditions, including wildly separate share classes, which give some shareholders significantly more rights than others, have resulted in a danger of widespread overvaluation. Some shareholders have voting, rights to assets, rights to dividends, rights to inspect records. Snap won't give any shareholders voting rights, and the shares have steadily declined since the IPO.
Source: https://www.cnbc.com/2018/05/22/tech-bubble-is-larger-than-in-2000-and-the-end-is-coming.html
Also at MarketWatch.
(Score: 4, Interesting) by crafoo on Friday May 25 2018, @01:57PM (1 child)
Investors new to the VC game, including hedge funds and mutual funds, came in when the Jobs Act started to get rid of investor protections in 2012, because there were fewer IPOs occurring.
Oh how very interesting. I wasn't aware of many of these details. Time to do a bit of reading.
New regulatory conditions, including wildly separate share classes, which give some shareholders significantly more rights than others, have resulted in a danger of widespread overvaluation.
well that's very interesting too. How many people are actually aware of this? That certainly seems like a subtle rigging of the game by the "big players" to hog the majority of the easy and safe profits while deferring the risk amongst the larger population of sucker-investors.
(Score: 2) by aclarke on Friday May 25 2018, @02:34PM
I've you're part of any private companies where shares are being awarded, and you're paying any attention, you'll know this. If you don't, shame on you. There have been different classes of shares since forever, but lately the problem is just getting worse as the big investors in your company are more likely to be actively trying to defraud actual workers of actual profit. It's always been important for investors of any type to know the details of their investments if they want them to perform well.