Changed Circumstances
“Changed Circumstances” – a cartoon that illustrates the journey that once high-flying tech unicorns are facing.
In 2021, 2-3 new tech unicorns were galloping out of their stables daily, this year we are averaging 0.1 per day.
Furthermore, existing unicorns are seeing compressed valuations when they raise more capital, resulting in several companies losing their unicorn status.
For example, in April Cybereason, an endpoint security company, raised $100M at a $350M valuation led by Softbank at a 90% valuation discount from its prior funding in June 2021, which had then valued the company at $3.2BN.
With most venture-backed startups on an 18 month to 2-year funding cycle and 40% of the 2021 class already having raised capital, the news can only get worse from here.
The remaining 60% of this class of unicorns have either sold or are profitable, or more likely trying to extend their runway by cutting costs and forlornly hoping that they can grow into their previous valuation despite the very different market conditions.
