From an article in The Economist magazine on November 28th, 2015 titled The Rise and Fall of the Unicorns.
Valuations for private technology firms are increasing at a slower rate compared to six months ago. Analyst Fred Giuffrida, at Horsley Bridge, says that
the valuations in late-stage rounds of financing have declined by around 25% in the past six to eight months. These rounds are also taking slightly longer to complete.Investors have become more cautious, with fewer tech specialists participating in new financing rounds. Taking their place are general investors such as hedge funds, asset-management firms, and sovereign-wealth funds.
Several notable mutual funds have marked down the value of some of their unlisted holdings. mutual funds, most notably Fidelity, have marked down the value of some of their unlisted holdings:
Fidelity wrote down Dropbox, a cloud-storage firm, by 20%; Snapchat, a messaging app, by 25%; and Zenefits (software) and MongoDB (databases) by around 50% each.
Many thought that a new breed of startups would be able to cause problems for Silicon Valley’s big boys, but this hasn’t yet proved to be the case. Amazon, Facebook, and Google have continued impressive growth, and are demonstrating a power that startups haven’t been able to match.
What do you think? Have the days of insane billion dollar valuations and easy financing ended?
The days of insane valuations haven't ended yet. There are still plenty of later-stage venture capital firms flush with cash that are more than willing to drive up the valuation of unicorns to unreasonable levels. It won't belong, however, when the game stops.
I think that were going to see a correction in the tech sector where companies with valuations based on MAU growth and not revenue with no real monetization plan (Ex. Snapchat) will come back down to earth. Companies with legit business models like Uber, AIrBnB, Pinterest, Stripe will be fine. Zenefits is the next disaster story even with Sacks at the helm.
Balloons and air guns (in the near future)
Uber is a Ponzi scheme.
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