Silicon valley unicorn valuation bubble is being squeezed out

By Bernice Arnold,2015-07-17 03:34
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Silicon valley unicorn valuation bubble is being squeezed out

    Silicon valley "unicorn" valuation:

    bubble is being squeezed out

    Silicon valley venture investment climate is uncertain, the bad news and good news seems to be just as much, while Snapchat, Dropbox was lower valuations, reality, Lyft but still can't wait to announce a new round of financing.

    High-profile mobile payments company Square cut after the listed price, but in the second day nearly 50% first-day gain to the outside world was dumbfounded.

    Wearable device market upheaval, Jawbone recently announced job cuts 15%, Misfit is Fossil bought for $260 million.

    Silicon valley "unicorn" (more than $1 billion valuation) appears to be in such a dilemma: how to prove to the world the value of my own now.When investors become cautious and strict, this task is becoming more difficult.

    About silicon valley startups overvalued, bubble has long been a debate, but the lack of arguments have short legs, until recently, more and more evidence that overvalued not alarmist.

    Is one of the most recent Snapchat, a lot of people don't believe in the social application of up to tens of billions of dollars now valuations, until recently, such mistrust it even infects investment institutions.Fidelity is involved in the social networking application E round a $540 million investment in May this year, in its quarterly report, the fidelity will Snapchat valuations of a 25% cut in the second quarter, namely fidelity think Snapchat is worth $12 billion, rather than when the last round of financing of $16 billion.

    Besides Snapchat, other lower valuation of the company include do high-quality goods of Blue Bottle coffee (Blue Bottle), by more than 40%, the biggest is estimated lower amplitude Zenifist, this provides HR services start-up company valuation is nearly 50% decline.

    Such things are bad, because it is probably just the tip of the iceberg.As more and more "unicorn" start-up financing rounds into the later period, represented by fidelity more institutional investors will be involved, these investment firms have more strict information disclosure requirements than traditional vc, therefore the outside world will be more and more from the investment institutions to disclose earnings report, see their perception of start-up company valuations.

    In other words, some haven't like fidelity investment institutions involved in start-up companies, their value might have not previously so high, but there was no clear public information to reveal it.Company, for example, from the point of access to information, the company although is still a member of the "unicorn club", but a $1 billion valuation is 2012 D round when valuations, in continuous had shut down more than the global offices, the company executives frequently leave after the event, such as its valuation can maintain more than $1 billion to convincing.

    The recent interest in the circle of science and technology of the highest mobile payments company listed on the Square, the situation may be faced by startups most fully exposed.

    By the Twitter founder Jack Dorsey, Jack Dorsey, led by the company, the listed value than the last round of financing of $6 billion a year ago price cut by a third, particularly in public on the eve of the price down to $9 a share, below listed clearly listed in the application documents before 11 - $13 interval, valuations have been cut to less than $3 billion, further shows

    the road is not smooth, not recognized by Wall Street investment institutions, listed shares rose nearly 50% on the same day, the second day and tumbled more than 5%, there are suspected of early investors dump.

    Listed to participate in the Square before the last round of jpmorgan chase and other institutional investors, seems to have anticipated such an adverse market situation, through the investment terms in the additional "ratchet clauses" lock early gains, Square has to on to them by way of issuing shares more investors to compensate for these late into the bureau, the price is the equity dilution.

    Snapchat start-up company valuations are lower, or Square listed experienced twists and turns are invariably such a signal to the outside world that the early stage of the silicon valley startups overvalued situation has exposed more and more obvious, the early stage of the high valuations is gradually return to rational, secondary market investors are more cautious, for these startups, probably will have to accept the test of painful transition.

    While from the perspective of the entrepreneur anyone maybe don't want to see the company valuation being downgraded after each round of financing, but on the positive side, found the problem as early as possible to face the problem and try to adjust, the total is better than the day of the fiasco of more pain.

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