While I'm not expecting Uber to be valued at $100mm next week, there does seem to be a trend emerging in the convergence of price and value at these so-called "unicorn" start-ups, which is not a particularly good thing for the founders and early investors (among others). As CNBC reports:
High-profile consumer start-ups are feeling the pinch. Evernote and One Kings Lane are cutting staff, Rdio was acquired out of bankruptcy, Gilt Groupe is nearing a sale for a fraction of its peak valuation (according to The Wall Street Journal) and Dropbox shut down two products.
In the absence of IPOs, employees at highly valued start-ups are trying to sell some of their shares on the secondary market, but buyers are increasingly scarce.
It appears that valuations are coming back down to an area of normalcy, where projections may need to be backed up by some sort of quantifiable metrics (how crazy is that?) However, for the cream of the crop, investors still seem to be piling on to whatever they can attach themselves to- start-ups such as the aforementioned Uber, AirBnB, and Lyft are all boasting extremely healthy valuations as of late.
I think this will be an interesting time to see what the 18-25 year olds plan to do with their professional lives. As we've all seen on this forum, there is usually a minimum of one post a week asking whether or not this person should enter Wall Street over Silicon Valley (a topic touched on quite nicely by @UTDFinanceGuy over here.) Especially due to the issues being faced by non-key hires (namely their "equity" being diluted to near-worthlessness), will we see a shift in this east vs. west trend? Or will a taste of employee lounges adorned with craft beer and Xbox (minus any realistic expectations of becoming an IPO-billionaire) keep drawing top graduates from Wall Street to Silicon Valley?