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Tech Unicorns Are Going Public at Near-Record Pace
- AchieveLife 8y agoNon paywall link: https://outline.com/bUYzWn https://outline.com/bUYzWn My opinion: The bubble expands.
- maxxxxx 8y agoI think the bubble is ending. They want to convert their phantasy money into cold hard cash from retail investors (aka "suckers") before it's too late.
- karmasimida 8y agoMy thoughts as well. It is now or never.
- rapsey 8y agoOr they ran out of any other options to raise capital and they are desperate. Another sign the bubble is ending.
- adventured 8y agoThe interesting thing about the rush is that they're already too late. They're going to have to accept mediocre exits (versus prior expectations), or abandon their IPO plans. The growing weakness in the IPO markets can be seen eg in the recent Softbank IPO. Globally synchronous growth has become a globally synchronous melt (from housing in Australia & Canada, to EU growth forecasts, to China, and US forecasts eg FedEx today, to commodity markets). Junk stocks like Blue Apron have already burned to the ground. GrubHub has been chopped in half. Facebook is already sporting a value stock-like ~16 forward PE (imagine what it might fetch in a recession, 12 times earnings?). There are dozens of prominent, younger tech stocks that face a very painful valuation reckoning soon. What are Spotify, Workday, Box, Dropbox, ServiceNow, Twitter, et al worth if you drain all the froth from the market? Is Shopify's billion in sales really worth a $15b market cap, or more like $5b? Is PayPal's modest growth really worth ~50 times earnings, or half that? Trillions in paper wealth are about to be vaporized and all it took was 2.x% interest rates. Welcome to Japan, where rates can never again be allowed to rise because of the debt load (both corporate and fed govt), and the stuck-in-the-mud debt model guarantees perpetually slow growth as the debt eats away at your capital available for productive purposes (just 1/4 annually of our public debt interest cost now would repair all of our infrastructure over a decade, instead we're stuck forever paying for the wildly irresponsible spending from the last ~14 years; 25-50 years from now, that debt will all still be sitting there eating the budget, and or American wealth via currency debasement to paper over it gradually).
- toomuchtodo 8y agoThis is spot on. As Warren Buffet said, “You only find out who is swimming naked when the tide goes out.”
- cobookman 8y agoWhy not raise rates, cause the crash and move on? Sounds like a good solution.
- lotsofpulp 8y agoAnd that public debt interest doesn't even include unfunded defined benefit pension and OPEB (other post employment benefits, e.g. retiree healthcare). I would expect more toll roads, higher taxes, less services, and means testing for social security and medicare.
- maxxxxx 8y ago"They're going to have to accept mediocre exits (versus prior expectations), or abandon their IPO plans." Mediocre is relative. With a lot of unicorn valuations if they even get "only" 20% they will still have made a lot of money.
- exolymph 8y agoRetail investors aren't the primary buyers of IPO stocks, are they? Isn't much of that inventory pre-sold on the road show?
- almost_usual 8y agoThis is pretty much it, a desperate attempt to leave the bag with the public before these companies that aren't profitable run out of money during a bear market.
- brobrobro 8y agoExactly
- bunnycorn 8y agoSurely, and I think it will be dramatic to the top 4 + Facebook. You can say that AAPL is slipping because this years model doesn't look different or whatever, but what about the others? They are hard crashing. (There were two trillion dollar companies but now there's no company above 800 billion)
- deleted 8y ago[deleted]
- mrnobody_67 8y agoVCs have 10 year funds... many of the investments made in 2007-2009 are fully mature, and VCs need to return cash to LPs.
- krn 8y agoInterestingly, 2007-2009 is exactly the period during which Airbnb, Uber, Dropbox, Github, Spotify, Quora, Evernote and Kickstarter were founded.
- tenpoundhammer 8y agoI've been working for a startup that recently exited it seems to be common knowledge in the startup community( and everywhere else? ) that a recession is just around the corner. I'm definitely not an expert in economics but these are just the pieces I've put together. From what I've heard/read the recession will primarily affect stock pricing and available investment assets. Many startups feel that if they don't exit now they will never have the opportunity or will have to exit with much lower numbers. This seems like a strong driver of exits.
- AchieveLife 8y agoSimilar experience. A VC told me that "Money is flowing freely right now" and to "take advantage of it". Implicit message was that it won't be this way in the near future and now is the time to jump on the wagon.
- learc83 8y agoVCs have been saying that for years. It won't always be this way, and we will almost certainly will have a recession in the "near future", but whether that's 10 weeks or 10 years away is the real question.
- AchieveLife 8y agoI'm not so much concerned about when it will happen rather the inflated attitude expressed by the VC about money. like a child playing with fire.
- stickfigure 8y agoIt's kind of their job, no? You wouldn't expect to hear a VC say "Hey, here's a term sheet, but no rush - get back to us when you feel like it, there's always plenty of money later." "Recession is just around the corner" is VC-speak for "Offer available while supplies last! Hurry, operators are standing by!" That doesn't mean it isn't true, of course.
- lgleason 8y agoGiven what I'm seeing with this and on the ground with startups we are definitely in a bubble.
- geodel 8y agoAm I misremembering or was there really an article few months back that a lot of tech unicorns prefer private money over public and hence deny public a chance to make money via stock market.
- terragon 8y agoI remember reading the same sometime ago, and on reading this headline, I was glad for a little while until I started reading the comments.
- BrainInAJar 8y agorats, titanic, etc.
- brobrobro 8y agoPump and dump
- almost_usual 8y agoNeeded to create a new account to post this?
- trhway 8y agoAdd also the 11th hour acquisitions.
- mmanfrin 8y agoI wonder if this means startup funding will be a bit plusher in the coming years.