2015-07-03

Startups, Valuations, Unicorns, Venture Capital, a16z Slides/Podcast

Unicorn is a term in the venture capital industry, which denotes a start-up company whose valuation exceeds One Billion Dollars (US$). Examples are Uber, domain name: uber.com, a unicorn valued at $41.2 billion, and Snapchat, domain name: snapchat.com, a unicorn valued at $15 billion. Fortune magazine counted over 80 unicorns as of January 2015. According to Wikipedia, a new buzzword, decacorn, is now used for companies valued over $10 billion, such as Airbnb, domain name: airbnb.com, Dropbox, domain name: dropbox.com, Pinterest, domain name: pinterest.com, Snapchat, and Uber.
"While macroeconomic factors like low interest rates play a role, I think a big reason for the quantity of unicorns is the fear of missing out on one of the greatest periods of value creation we have ever seen. However, some of the most valuable opportunities — particularly the aforementioned market-makers — have strong winner-take-all characteristics: this potentially limits the number of quality unicorns. I think it’s this dichotomy that makes the current bubble discussion so difficult: most unicorns may be overvalued, but in aggregate they are probably undervalued. It turns out winner-take-all doesn’t apply just to the markets these startups are targeting, it applies to the startups themselves."--Unicorns - Stratechery by Ben Thompson (emphasis added)


U.S. Technology Funding -- What's Going On? 
From a16z.com - Andreessen Horowitz, venture capital firm - What’s going on in the public markets? What are all these so-called “unicorns”? What’s going on in venture capital?  "This time is different." It is different. Because it's always different... (published 15 Jun 2015)

Below: a recent a16z podcast: Taking the Very, Very Long View on Tech Investing--


It’s called “perpetual” or “eternal” capital, a very large pool of money that is invested on behalf of university endowments, foundations, etc., with a time horizon that extends generations into the future. The people who manage that money are driven by very different forces and thinking than your average Wall Street investor. Liquidity, for example, is not something this category of investors is immediately concerned with, nor are they swayed by your average economic cycle. At least, that’s the theory... how do these investors think in practice? In this segment of the a16z Podcast, Andy Golden of the Princeton University Investment Company, Ben Gomez of Pilothouse Associates, and Edwin Poston and Mel Williams of TrueBridge Capital Partners share their thoughts on tech valuations, liquidity in the markets, and what some in Silicon Valley may have a tendency to overlook.

So what's going on? Fewer IPOs, but more Unicorns that stay private for much longer, with multiple rounds of financing.


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