The cold dish rag of reality is smacking Silicon Valley in the face. Unicorns, private companies with ludicrous billion dollar valuations like Dropbox, Square, and Snapchat, are being downgraded by investment banks, with their projected IPO prices now lower than their last private round of investors paid for it. That means if the company IPOs, late investors will have lost money. That just wasn’t supposed to happen. Disruptive innovators were supposed to make zillions on their IPOs. Oh wait, those zillions only flow to a few, with the company itself being mostly relevant to the plans. Really, it’s just a new version of pump and dump. Once big flaw in their greedy little plans is that none of the unicorns are making a profit. Oopsie.
A bigger question is whether it will be a controlled demolition as unicorns everywhere are demoted to what we first dubbed “zerocorn” status in the coming days. To be sure, the VCs are desperate for a controlled demolition, and hoping the broader market ignores the euphoria that took place in Silicon Valley over the past 3 years, is now over, and that giddy investors overshot by at least 25-35% to the upside in the past several private funding rounds as everyone was rushing to pass the valuation hot potate to ever greater, and richer, fools.
And here is the stunner: the combined “valuation” of total US unicorns is $486 billion. Their combined profit? $0.