Just as the public equity markets began 2016 with a serious rout, now comes the news that unicorns are falling out of good graces with investors.
As Reuters reported Thursday (Jan. 7), a relatively scant nine companies touched the much vaunted unicorn designation, with private valuations of $1 billion or more, and that compares unfavorably to the 23 companies that gained that moniker and valuation in each of the second and third quarters of 2015. The data, said the newswire, came from CB Insights, which monitors private investments by venture capital and private equity firms.
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In an email to Reuters, CB Insights CEO Anand Sanwal stated that “sentiment got very negative” moving out of the third quarter, adding that “while we expected that would manifest in the funding stats, we were surprised to see the hit so quickly — in just the next quarter.”
The heavy cash weighting in the private investing realm means that the movement and once-inexorable march to initial public offerings is no longer so quickened. Now, valuation rounds stretch on for several iterations, and coffers swell by, in some cases, billions of dollars. The total tally of tech unicorns, according to CB Insights, stands at 144 firms, with total implied market caps of about $525 billion.
The pace of dealmaking activity has slowed, too, as CB Insights found that in the last quarter of the year, the total number of financing deals stood at 39, measured by capital inflows of at least $100 million, with comparable tallies of 72 deals of that size and scope in the third quarter and 65 such deals in the second quarter. Total deals funded (of any size) came to 1,743 in the final quarter, down from 2,008 in the second quarter, Reuters said.