A thousand Unicorns out there – herald of Heroes or Horrors?

A thousand Unicorns
Image by sontenn | Bigstockphoto

A thousand Unicorns are now alive and well, trumpeted CB Insights last week, asking us to make a note of where we were on the day, so that we can tell our grandchildren.

The date coincided with Chinese New Year, an auspicious 2/2/22. It is also the year of the Tiger, so, according to CB, we are in for an exciting year.

But.

There is a part of you that has to ask whether a thousand Unicorns is a good thing. A start-up with a valuation of $1 billion is something that bends the mind at the best of times but a thousand of them (sorry, but there is not enough room on this page for the number of zeros required to give you the 1,000 x 1 billion calculation) is just too much.

On one level what a thousand Unicorns means is a lot of capital chasing (presumably) more and more mediocre innovation, ideas and management.

On another, it begs the question: what exactly will these Unicorns do with the money, and how many will be left in a few years’ time when the inevitable and fierce competition has driven some into bankruptcy, others into the hands of huge conglomerates and others, for sure, into the history books of successful companies.

We should never underestimate the fragility of companies, however huge. And this is particularly true of Unicorns.

There was a moment about 20 years when a BSS company (in those days, BSS was pretty sexy – honest) almost hit that $1 billion valuation, without having any customers and not really having a product. As one industry analyst observed, ‘the product is very flexible, in the same way that an empty Excel spreadsheet is flexible.’ The valuation was driven by the hype of new ideas and directions.

The (hopeful) end of the pandemic is already causing a massive correction to companies that thrived because of the particular needs of the lockdowns – Pelaton and Netflix are perhaps the highest profile companies to tank – for their sake, hopefully, temporarily. Others are living through the most extraordinary roller coaster rides ever recorded.

Almost every sector has been flooded with cash, from retail to healthcare and, of course, Fintech. Blockchain start-ups alone have attracted $25 billion recently.

A thousand Unicorns sounds a lot like a bubble, a lot like a dot com boom and bust situation, where you could write ‘I Have an Internet Idea’ on a postcard, throw it at Silicon Valley and wait for the cheque to arrive.

For those people who think that a thousand Unicorns is – without question or challenge – a good idea, here is a colouring-in book for when it all goes horribly wrong.

Related article:

There is an asset bubble forming and experts say it is huge and dangerous

Be the first to comment

What do you think?

This site uses Akismet to reduce spam. Learn how your comment data is processed.