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The Unicorn Shoe (Wing) Drooping Towards Dropping?

SoftBank’s Hard Landing Among The Tech Unicorns

The worries over valuations tied to unicorns, by now universally defined as the tech firms with implied valuations above $1 billion, have ebbed and flowed, depending on what time of the quarter or even the day it might be.

Most recently it seems the alarm is being sounded again, as Reuters reported earlier in the week that roughly a third of these privately held tech firms, those limited to the United States, could see a downturn that would take them below the $1 billion threshold.  That comes courtesy of a report from SharesPost, an investing platform that Reuters said is geared toward pre-IPO firms.

Greg Brogger, who serves as founder and CEO of the firm, stated that "Not all of these companies will continue to go up and to the right.”  That benchmark below the $1 billion mark will apply to companies regardless of being acquired or going public.  The data show that only 1 to 2 percent of VC investments get to that $1 billion level via IPO or via acquisition. Even so, said SharesPost, the VC players have been increasing the pace of investments, so a few sizable returns should come to fruition. Given the fact that the average age of the unicorn is about seven years, while the average age of an IPO candidate is about 10 years, there may not been an IPO surge among the unicorns for a couple of years.

Drilling down into individual names in the unicorn space, speculation concerning IPOs surfaced yet again as the trade press reported that Nutanix, as Bloomberg reported, may be gearing up for a roadshow as soon as next month.  The virtualization and storage company may predicate part of its pitch on the fact that it has been able to poach business from larger rivals.  

TransferWise said that it is entering the corporate payments space, and again is using its network of banks to bring money across borders.   

Zenefits has continued to settle compliance issues tied to licensing within U.S. states, most recently Delaware and South Carolina, fined nothing in the former state and $29,500 in the latter.



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