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Wings And Lots Of Prayers

Unicorns may pray

The frozen tech IPO market has been a subject that frequents the news, in tandem with what might be an open-ended question: When will things thaw for real, and beyond the impressive Acacia listing that came through last week, with 36 percent gains in the first gasps of life?

The answer is elusive. There have been just two tech IPOs this year (including the one just mentioned, while SecureWorks has had a much less auspicious debut), and nothing is really lining up on the launching pad. 

It’s no wonder that the unicorns may be as shy as little ponies taking tentative steps away from the stall.  The investment landscape has been littered with busted IPOs, and the private equity spigot has been tightening with ever more scrutiny on such old world financial concepts as profit and positive cash flow. And positive free cash flow? Let’s not get nuts here. 

A few months ago, Tanium, a cybersecurity firm, said it might not come to public markets amid such turmoil, a likely wise decision against the backdrop of an ensuing meltdown in the cybersecurity space. Another firm just said earlier this week that, in essence, patience is a virtue. Puppet, an IT automation firm based in Oregon, is in essence waiting for better timing before diving into a public listing.  

Zenefits had a bit of a social media blitz (and media blitz surrounding the social media), as the CEO of the beleaguered online human resources management company took to cyberspace to refute an article by The LA Times that compared the two as disruptive firms that wound up being disrupted themselves, at least partly by hype and valuations.

Separately, and in what might be a shot across the bow for young millennials looking to grab a foothold within startups, an article in The Economic Times noted that recruitment drives across campuses in India have been notably lacking in startup presence, and offers have been lower too – an ominous sign in what used to be a competitive marketplace for hiring tech professionals.

None of this augers well for tech unicorns, which make their bones, reputations, and ultimately riches on the idea of an exit strategy – and the relatively, formerly easy path of IPOs has been stymied with roadblocks and the detritus of firms that didn’t make it. By slowing hiring down (though we noticed no down rounds this week), the implication is the tech firms see rougher times ahead, enough so that the growth that does come will have to be done with the same staff in place. Whereas the mythical beasts once soared, sputtering now is on the horizon. 

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