(public).sospep.subjects ~ view article ~ the-age-of-the-unicorn

<h1 style="text-align: center;">the age of the unicorn</h1>
<h2>[WHAT]</h2>
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<li>]&nbsp; by Erin Griffith,Dan Primack @fortune.com</li>
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<h2>[WHY]</h2>
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<li>]&nbsp;Cowboy Ventures founder Aileen Lee <a href="http://techcrunch.com/2013/11/02/welcome-to-the-unicorn-club/" target="_blank">coined the term unicorn</a> as a label for such corporate creatures in a November 2013 TechCrunch blog post</li>
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<h2>[WHERE]</h2>
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<li>] READ THE FULL ARTICLE</li>
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<li>] <a href="http://fortune.com/2015/01/22/the-age-of-unicorns/">http://fortune.com/2015/01/22/the-age-of-unicorns/</a></li>
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<h2>[WHEN]</h2>
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<li>] 2015-01-22</li>
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<h2>[EXAMPLE]</h2>
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<li>] The billion-dollar tech startup was supposed to be the stuff of myth. Now they seem to be &hellip; everywhere.</li>
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<li>] only 39 companies in the decade previous have reached the B valuation, NOT including the likes of google and amazon</li>
<li>] in 2014 alone, over 80 startup companies have reached that valuation, see LIST below</li>
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<li>] Stewart Butterfield(Slack) had one objective when he set out to raise money for his startup last fall: a billion dollars or nothing. What Slack needed, Butterfield believed, was the cachet of the billion-dollar mark.&nbsp;</li>
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<li>] in October&mdash;less than a year after the company released its namesake product&mdash;Slack announced the close of a $120 million round of financing. Its valuation? One billion dollars. Butterfield&rsquo;s wish had come true: Slack was the tech world&rsquo;s newest &ldquo;unicorn.&rdquo;</li>
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<li>] LIST - <a href="http://fortune.com/unicorns" target="_blank">unicorns</a></li>
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<li>] given that these companies are privately held, a few are sure to have escaped our detection. The rise of the unicorn has occurred rapidly and without much warning, and it&rsquo;s starting to freak some people out</li>
<li>] <a href="https://fortunedotcom.files.wordpress.com/2015/01/uni-02-011.jpg?quality=80" target="_blank">graphic</a>&nbsp;- shows all the unicorns with their most recent valuation, their founding date range,</li>
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<li>] LIST - decacorns</li>
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<li>] venture capitalists have begun targeting even bigger game. They&rsquo;re now hunting startups with the potential to rapidly reach a $10 billion valuation&mdash;or, as Green calls them, &ldquo;decacorns. At the end of 2013, only 1 had reached that level, Facebook. Today there are 8 including Uber, Xioami, AirBnB</li>
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<li>] Technology is driving the boom. Smartphones, cheap sensors, and cloud computing have enabled a raft of new Internet-connected services that are infiltrating the most tech-averse industries</li>
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<li>] Uber is roiling the taxi industry; Airbnb is disrupting hotels. Investors see massive opportunity in the upheaval</li>
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<li>]&nbsp;broader financial trends</li>
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<li>] A nearly six-year-old raging bull market in public stocks has produced a tailwind for private company valuations </li>
<li>] Record-low interest rates also have caused some big institutional investors to search for returns in the high-risk, high-reward world of venture capital. </li>
<li>] a lack of regulation: After the passage of the JOBS Act in 2012, which aimed to make it easier for small businesses to raise capital, startups could take on many more investors before the Securities and Exchange Commission effectively forced them to go public</li>
<li>] the intangible element of perception. In the startup world, a valuation of $1 billion says that you&rsquo;re no longer a fly-by-night startup with plans to quickly sell out to Google.</li>
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<li>] Venture capitalists justify these soaring valuations by looking backward. </li>
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<li>] After the dotcom crash, a wave of prudence swept over the Valley. Investors kept valuations low and tried not to overcapitalize their companies. That strategy lasted until Hurricane Facebook came along. All of the cautious types who passed on investing in the social network early, because it was too expensive at $250 million or $500 million, were left scarred and paranoid when it went public in May 2012 with a market cap of $104 billion. If a startup is going to be worth billions of dollars in a few years, why quibble over a few million on the entry price? </li>
<li>] doesn&rsquo;t hurt that American corporations have record-breaking stockpiles of cash on their balance sheets.</li>
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<li>] bubble&nbsp;?- All of this has begun to feel bubblicious,</li>
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<li>] Marc Andreesen&nbsp;"People who went through 2000 are psychologically scarred and arguably have been risk-averse for the last 15 years. If you didn&rsquo;t go through it you&rsquo;re in danger of always believing you can raise money at a higher valuation.&rdquo;</li>
<li>] Alan Patricof &ldquo;People are buying traffic growth and revenue growth, but it&rsquo;s the &lsquo;emperor has no clothes&rsquo; theory,&rdquo; he says. &ldquo;At some point all of these companies will be valued on a multiple of Ebitda. If the IPO market goes away, or for any reason there&rsquo;s a blip in the outlook, people could be left holding a lot of inventory they wish they didn&rsquo;t have.&rdquo; </li>
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<li>] bubble ?- Proponents of the unicorn boom posit that this time&mdash;no, seriously!&mdash;is different. </li>
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<li>] Many of the billion-dollar startups, they argue, have the actual customers and revenue that companies of the dotcom days lacked. But no one in the VC world is so sanguine as to suggest that, sooner or later, we won&rsquo;t experience a market pullback</li>
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<li>] proceed - with caution</li>
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<li>] startups should control their &ldquo;burn rates&rdquo; and raise as much new money as possible to protect against a future funding drought. Entrepreneurs listened, at least to the second part: U.S.-based companies raised more venture capital in the fourth quarter of 2014 than they did in any other quarter over the prior 13 years, according to the National Venture Capital Association</li>
<li>] more aggressive fundraising is no guarantee that unicorns will grow into their valuations. &ldquo;Going from $0 to $50 million in revenue is a lot different from going from $50 million to several hundred million,&rdquo; says Green. &ldquo;A lot of folks don&rsquo;t make that transition. Most don&rsquo;t</li>
<li>] Several unicorns have already experienced a pullback. Open-source software company Hortonworks was valued at $1 billion by private investors but lowered its market cap to $666 million when it went public last December. Box, the data storage company credited with making enterprise technology cool, was preparing to hold an IPO just days after this magazine went to press. Its initial valuation was expected to be at least 30% lower than the $2.4 billion it commanded from private investors like TPG Capital last summer.</li>
<li>] Fab - design-focused e-commerce site that said it would generate $250 million in revenue in 2013. It ended up bringing in around $100 million. shrank from 750 employees to 150, and CEO Jason Goldberg repositioned the company as a custom furniture business. widely reported to have raised some of its $336 million in funding at a $1 billion valuation, but Goldberg acknowledges to Fortune that its valuation never actually topped $875 million. He acknowledges the company isn&rsquo;t worth close to that today. &ldquo;If you allow yourself to believe you&rsquo;re worth $1 billion after two to three years of being in business, you&rsquo;re going to get yourself caught up in trouble,&rdquo; Goldberg says</li>
<li>] Even in the best of times, of course, startup investing is high risk. As quickly as the Age of Unicorns arrived, the conditions that created it could reverse and leave entrepreneurs and investors wistful for what might have been. </li>
<li>] I think you&rsquo;re going to see a lot of failure in 2015,&rdquo; says Benchmark Capital partner Bill Gurley, who sits on Uber&rsquo;s board of directors. In the meantime, expect more billion-dollar startups to emerge&mdash;at least for now. &ldquo;You can&rsquo;t choose not to play,&rdquo; Gurley says. &ldquo;If you&rsquo;re in the enterprise segment and your competitors are raising $150 million at high valuations and pouring it into sales, you either can do something similar or be conservative and no longer matter.&rdquo; Which might explain why some VCs continue to invest even as they predict failure. There&rsquo;s always the hope and belief that the value created by a few successful unicorns will offset the losses of those that fail.</li>
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<li>] In the meantime, expect more billion-dollar startups to emerge&mdash;at least for now. </li>
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<li>] &ldquo;You can&rsquo;t choose not to play,&rdquo; Gurley says. &ldquo;If you&rsquo;re in the enterprise segment and your competitors are raising $150 million at high valuations and pouring it into sales, you either can do something similar or be conservative and no longer matter.&rdquo; Which might explain why some VCs continue to invest even as they predict failure. There&rsquo;s always the hope and belief that the value created by a few successful unicorns will offset the losses of those that fail.</li>
<li>] Butterfield knows the easy venture money will dry up at some point. It&rsquo;s one reason Slack has spent only 1% of the money it&rsquo;s raised. &ldquo;You&rsquo;d have to be in a meteors-hitting-the-Earth scenario before Slack as a business would get into trouble,&rdquo; he boasts. Staying thrifty is a smart move. The prestige of being a unicorn diminishes with each passing quarter. When it&rsquo;s gone, he&rsquo;ll have a whole new fantasy to chase: profitability.</li>
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<h2>[HOW-TO]</h2>
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<h2>[REFERENCE]</h2>
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<li>] hn <a href="https://news.ycombinator.com/item?id=8933360" target="_blank">comments</a></li>
<li>]</li>
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<h1 style="text-align: center;">comment mine</h1>
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