Can One Build a Unicorn Without VC Funding?

From $100k to $1 Million: How Likely is it That You’re Building a Unicorn?

What Happens After the Unicorn Carnage

Predictably, the technology industry is going through an adjustment. Many public stocks in hot sectors like cloud computing have crashed. Overvalued Unicorns are experiencing down rounds, layoffs, and all the other unsavory stuff that they deserve. More Unicorns will turn into Unicorpses as the correction continues. You could say that the industry is in bad shape.

I disagree.

The industry, actually, is full of wonderful companies that offer robust value propositions and excellent business models.

It is the market and the speculators — including the VCs who invested in the Unicorns at crazy valuations — who ran amok.
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The Unicorn Bubble Will Burst – Here’s What Will Happen Next

My Entrepreneur Journeys book “Billion Dollar Unicorns” came out in December 2014. Leading up to it and after, I have had the opportunity to interview over 50 Unicorn entrepreneurs, and another 20 or so potential Unicorns.

By now, I imagine that you have read plenty of coverage predicting the crash of 2016. Experts hastily point out that it will be nothing like the Dotcom crash when middle class savings got destroyed. No. This one will only piss away a few hundred billion dollars. The damage is well contained.
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Focus on Sustainable Growth, NOT Growth at All Cost

You may have read my recent piece Billion Dollar Unicorns: Box Struggles in its Public Avatar, where I discussed how this darling of the VCs is finding the public market rather unfriendly:

Their stock is trading at $13.71 with a market capitalization of $1.65 billion. It touched a high of $24.73 soon after listing in January this year. Box had listed on the exchange at $14 a share. As expected, its valuation has fallen since pre-IPO levels. Prior to listing, Box had raised $564.1 million with their last round of $150 million valuing them at $2.4 billion.

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Looking Forward to the Real Silicon Valley

I am one of those people who doesn’t like bubbles. Right now, we’re experiencing a bubble in Silicon Valley with funny money driving weird, unproductive behavior.

Some people want this party to go on.

I don’t.

Francisco Dao has written a poorly analyzed post on VentureBeat titled What will happen to Silicon Valley when demographics strangle the global economy:

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Billion Dollar Unicorns: Hortonworks Needs To Deliver Results

A Markets and Markets report on Hadoop estimates the total Hadoop market to grow 55% annually to be worth $13.95 billion by 2017. Billion Dollar Unicorn club member Hortonworks is one successful player in this rapidly growing Hadoop market.

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The Commoditization of Venture Capital

The venture capital market is getting more and more irrational every day. VentureBeat just reported this week that VCs are ‘collecting logos’ of unicorn companies.

According to Pitchbook, more than 60 percent of all VC-invested capital went to rounds of more than $25 million in 2014, the highest percentage since the dotcom boom. There were 414 rounds of $25+ million last year, 50 percent more than the 276 rounds in 2013. VC capital invested jumped $20 billion from 2013 to 2014, while the number of financings fell by 16 percent.

Historically, private company valuations have largely been tied to valuations in the public market. But there is now growing concern that VC valuations have exceeded reasonable public valuations — a dangerous sign. Facebook’s $22 billion acquisition of WhatsApp has inflated valuation expectations. Meanwhile, potential tech buyers such as Google, Yahoo, Alibaba, Apple, and Microsoft have tens of billions of dollars in cash holdings. Series D+ valuations saw a 50 percent jump from 2013 to 2014. Valuations now exceed some of the closely watched historical exit parameters. We’ve also seen a significant increase in median Series B valuations. Capital invested in late-stage rounds was up to $11.5 billion in Q2 and $10.6 billion in Q4, representing the only two $10+ billion quarters since the dotcom boom. Seed rounds declined to 221 in Q4 versus 564 in Q1 2013.

I discussed the danger of overvalued private unicorns in Why Not All Private Unicorns Will Become Public Unicorns earlier.

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