Oct 5, 2019

The fall of unicorns

Illustration: Eniola Odetunde/Axios

Public market investors are turning a more critical eye toward "unicorn" startups, particularly those with lax governance and big losses.

Why it matters: This comes after years of laser focus on top-line growth, and is challenging for older startups that had geared their business models to the old normal.

  • WeWork is the most obvious example, with its new co-CEOs frantically seeking to shed assets and slow expansion.
  • Postmates was supposed to have filed its IPO registration by now, but hasn't.
  • There are dozens, if not hundreds, of other mature startups caught with their income statements down.

What comes next could be familiar for anyone who's ever tried to find a plumber: More demand than supply.

  • Unicorn growth has been driven by an unprecedented number of large, later-stage venture capitalists. This includes not only the $100 billion SoftBank Vision Fund, but also hedge funds and mutual funds.
  • These "VC tourists" will thin out, putting companies in capital limbo.
  • Some startups will get ghosted by their "founder-friendly" VCs.
  • The result could be a wave of rescue rounds, in which share prices are crammed down, or outright fire-sales.

The bottom line: For companies with reasonable controls and paths to profitability, all systems remain go. We are, after all, still in the longest-ever bull market for public equities.

  • But for unicorns that never looked beyond the trough, it could be slaughter season.

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Venture capitalists on track for $100 billion in startup investments

Photo: JOSEPH EID / AFP

Venture capitalists are on pace to invest over $100 billion in U.S. startups for the second straight year, including a record number of rounds more than $50 million. This might be the industry's high-volume mark.

The big picture: The dizzying numbers have been driven by an influx of new money that has helped companies stay private longer. But much of that new money comes from what I've previously referred to as "VC tourists" — or investors for whom startups aren't their core competency.

Go deeperArrowOct 10, 2019

Latino VCs form new group to increase industry representation

Illustration: Lazaro Gamio / Axios

A group of Latino venture capitalists in the Bay Area have formed an organization called LatinX VC to help peers advance or start their careers, raise new venture funds, and connect with limited partners in Latin America.

The big picture: Latinos make up just 1% of the America's venture industry, despite widespread conversation about increasing diversity.

Go deeperArrowOct 11, 2019

The brewing storm for Big Tech

Illustration: Sarah Grillo/Axios

The backlash against Big Tech is on track to escalate around the world in 2020 and with more concrete consequences.

Driving the news: Just this week The Verge published leaked audio of Mark Zuckerberg's internal Facebook meetings, wherein he claimed Facebook would win the legal challenge posed by Elizabeth Warren if she were elected president.

Go deeperArrowOct 5, 2019