03 April 2016, USA :
In the recent year, most Start ups appear to hit the roadblock when it comes to their investments in the billion-dollar fledglings.
Few of the 25 or more asset managers and venture capitalists contacted would talk on the record about unicorns.
They were even less happy to discuss the valuations of the start-ups they flocked to last year.
Many fund managers were forced to write down their investments in start-ups in the final three months of 2015, including those in Dropbox, the file storage website, Snapchat, the disappearing-photo app, and MongoDB, a database.
Salesforce CEO Marc Benioff said that big acquisitions haven’t really been part of Salesforce strategy for a while. The last big one it did was ExactTarget for $2.5 billion back in 2013. He didn’t plan to shift gears, but he’s keeping his eyes open.
“When you have deflating asset values, and you’re the CEO of a company, you’re going to look at public companies, you’re going to look at private companies, and you’re always going to say Are there other organizations who are going to come in?” he said.
In the meantime, Benioff is one of many people predicting a bloodbath among the highest valued startups, the so called unicorns that are said to be worth over $1 billion.
He said if such highly valued startups didn’t choose to go public when the economy was hot, they will be in a “very difficult position” when their “lofty valuations” decline. “Those startups will have to raise money at the new reality,” adding, “there’s going to be a lot of dead unicorns.”
Adley Bowden, vice-president of PitchBook, a database of venture capital and merger and acquisition deals, says: “Asset managers have historically invested in unicorns. The key difference now is that these companies would have already [had an IPO] and been publicly traded. But, without a public offering for asset managers to invest in, they have started investing more while the companies are still private.”
Aileen Lee, founder of Cowboy Ventures, a venture capital firm estimated 39 unicorns, inlcuding companies such as AIrbnb, Uber etc. But the number of unicorns has increased significantly since then, the research company, estimates there are 155 unicorns globally now.
Considering data and statistics, only time will tell the fortune of the start ups, whether they would prevail or fail.