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Posted on 10/09/2015 7:46:16 AM PDT by SeekAndFind
The number of private tech companies valued at $1 billion or more has surged so much this year that on average 1.3 so-called unicorn companies have been created every week in 2015, according to data from CB Insights.
But now it looks like winter is coming to Silicon Valley.
Fortune's Dan Primack went to San Francisco this week and met with a number of people involved with unicorn companies with ballooning valuations.
He says the mentality of people in Silicon Valley is starting to change, and people are getting scared.
"As in the past, they are nearly unanimous in sentiment," he writes. "The difference now is that their sentiment is fear."
Primack writes:
The past several years of raising too much, too high, too soon has run smack into a much more conservative investor ethos. Later-stage tech startups can still raise growth equity — and still lots of it — but not necessarily at the terms they were receiving just two months ago.
“This shift is only five or six weeks old, so most companies haven’t felt it yet,” a senior tech banker explains. “But I know of many companies who raised money at $1 billion valuations last year that are now being told that, to raise money now, they need to take around $700 million or $800 million. Probably with some serious structure that protects investors, like ratchets, on top of it.”
It should be noted that Primack is one of the best reporters on private equity and venture capital. He's really plugged in, and he's not an alarmist.
(Excerpt) Read more at businessinsider.com ...
If you don’t have any real earnings to show, at some point being valued at a $billion seems high.
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Business Insider, basically a news aggregator like Drudge, plus commentary, but little deep analysis was said to be worth $440 million.
BI is widely quoted here and on talk radio. It is an on-line WSJ, without a paywall.
So the pitch may be: we are the next BI.
...I gave up on the first, it was too hard.
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