“Unicorn” is a now-popular term that’s used to describe tech startups worth $US1 billion. They’re known for being magical and rare.
Now, however, unicorns are abundant in Silicon Valley. There are so many companies with sky-high valuations of $US10 billion or more that the industry has come up with a whole new name to describe them. Bloomberg Business has christened these companies “decacorns.”
“In 2013, there were 38 unicorns across all tech sectors; in 2014, there were 68 in mobile Internet alone,” according to a recent study. Of those 68, there’s a growing slew of decacorns including Airbnb, Dropbox, Pinterest, Snapchat, Uber, Flipkart. Uber’s latest funding round values it at around $US40 billion.
“It’s a made-up word based on a creature that doesn’t exist,” Bloomberg’s Sarah Frier and Eric Newcomer write.
The rest of the Bloomberg piece describes how investors and founders derive those enormous valuations through some fuzzy maths. Here’s the equation they came up with:
Valuation = (“founders hopes and dreams” times “how fast a company’s actually growing”) – (“downside protection” times “investor ‘fear of missing out”)
Even as valuations climb, there’s some healthy scepticism.
At Austin’s South by Southwest conference last Sunday, famed investor Bill Gurley said he expects to see some “dead unicorns” this year. Another investor, Todd Dagres, made his opinion’s clear to Bloomberg:
“If you wake up in a room full of unicorns, you are dreaming,” he said.
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