Unicorns, privately held start-up companies valued at over $1bn, are losing their appeal to investors. A recent study by Battery Ventures found that the value of 100 unicorns had decreased by 13% over the last nine months. Investors are becoming increasingly skeptical, as many unicorns have failed to live up to their hype and initial valuations. The venture-capital model, which allowed these start-ups to stay private for longer, is now seen as flawed.
Moreover, the lack of transparency in privately held companies has led to a mistrust among investors. The absence of regular financial reporting and the use of non-standard metrics to evaluate performance are seen as red flags.
Furthermore, the US Securities and Exchange Commission has warned of the risks associated with investing in unicorns. The regulator has raised concerns over the inflated valuations and lack of oversight in these companies.
In response, some unicorns have started to go public, offering shares on the stock market. But this move has not always been successful. Several unicorns, including Uber and WeWork, saw their valuations plummet after going public.
In conclusion, the unicorn bubble appears to be bursting. As investors grow wary, these once highly valued start-ups are facing a reality check.
Go to source article: http://www.bloombergview.com/articles/2016-03-04/unicorns-aren-t-so-beloved-by-investors-anymore