Are Unicorns Selling Their Horns?
February 23, 2016
I don’t think too much about start ups with valuations in the billions of dollars. Most of these companies do not do much business in Harrod’s Creek, Kentucky. I think more about the local truck stop’s supply of air filters than unicorns.
I did not, however, several items which may provide some insight into life after the slow down in the flows of easy investor cash.
The first item concerns some stakeholders’ efforts to convert their shares into cash. “Secondary Shops Flooded With Unicorn Sellers” reports:
the phones of secondary buyers are beginning to ring with a little more urgency, along with discounted offers of up to 30 percent off companies’ most recent valuations. Partly, such nervousness owes to employees, some of whom are getting laid off as companies cut back on costs in order to lengthen their runway. These former staffers have to exercise their options within 90 days or else lose them, and they’re calling secondary firms for help in figuring out what to do. Some sellers are venture capital firms that thought they could exit some of their investments in 2016 and are now concluding that they can’t.
The second article I noticed was “The £1.8 Billion London Tech Unicorn That’s Struggling to Pay Its Staff Is Worried about Going Bust.” I never heard of Powa Technologies. I learned:
London-based Powa is struggling to pay staff and suppliers. Accounts show it raised a total of $50 million (£34.9 million) last year from investors, but as of February 5, 2016, when the accounts were approved, it only had $250,000 (£174,600) in the bank. Meanwhile, the group owes $16.4 million (£11.4 million).
The unicorn zoo warrants a visit. Are smart unicorns selling their horns in an effort to survive? Are some unicorns starving? What about the pygmy unicorns in the search and content processing markets? How will these tiny creatures fend for themselves. Interesting? Without horns to sell, the baby unicorns may face an unpleasant fate.
Stephen E Arnold, February 23, 2016
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