Rare Sighting in Silicon Valley: A Unicorn
July 8, 2016
Unicorns are mythical creatures with a whole slew of folklore surrounding them, but in modern language the horned beast has been used as a metaphor for a rare occurrence. North Korea once said that Kim Jong Un spotted a unicorn from their despotic controlled media service, but Fortune tells us that a unicorn was spotted in California’s Silicon Valley: “The SEC Wants Unicorns To Stop Bragging About Their Valuations”.
Unicorns in the tech world are Silicon Valley companies valued at more than one billion. In some folklore, unicorns are vain creatures and love to be admired, the same can be said about Silicon Valley companies and startups as they brag about their honesty with their investors. Mary Jo White of the SEC said she wanted them to stop blowing the hot air.
“ ‘The concern is whether the prestige associated with reaching a sky-high valuation fast drives companies to try to appear more valuable than they actually are,’ she said.”
Unlike publicly traded companies, the SEC cannot regulate private unicorns, but they still value protecting investors and facilitating capital formation. Silicon Valley unicorns have secondary markets forming around their pre-IPO status. The status they retain before they are traded on the public market. The secondary market uses derivative contracts, which can contribute to misconceptions about their value. White wants the unicorns to realize they need to protect their investors once they go public with better structures and controls for their daily operations.
Another fact from unicorn folklore is that unicorns are recognized as symbols of truth. So while the braggart metaphor is accurate, the truthful aspect is not.