Quoted: on the rise of the ‘unicorn’ startups

“It used to be that unicorns were these mythical creatures. Now there are herds of unicorns.”

Jason Green, a venture capitalist at Emergence Capital Partners, on the growing number of “unicorns,” or billion-dollar tech startups. In fact, unicorns are becoming so common that Green says venture capitalists are now setting their sights on “decacorns” — startups they think could reach $10 billion valuations.

What a difference a decade has made: “Google was never worth $1 billion as a private company,” Fortune writes. “Neither was Amazon nor any other alumnus of the original dotcom class.” Now, the magazine counts more than 80 startups that have a valuation of $1 billion or more. The list includes Uber ($41.2 billion), Snapchat ($10 billion), Square ($6 billion) and more. On SiliconBeat, Heather Somerville has written about startups such as mobile-payments startup Stripe ($3.5 billion), online-survey company Qualtrics ($1 billion)  and more.

In the fall, a survey showed that startups are becoming unicorns faster than ever — an average of six years, Michelle Quinn wrote. But get this. San Francisco-based grocery-delivery startup Instacart just raised $220 million at a valuation of $2 billion. It was founded in 2012.

Surely all the unicorns are magical, right? Well, no. Fortune writes that some of them “have already experienced a pullback.” And the magazine quotes Benchmark Capital partner Bill Gurley: “I think you’re going to see a lot of failure in 2015.” However, Gurley says startups can’t afford not to aim for unicorn level: “You can’t choose not to play. If you’re in the enterprise segment and your competitors are raising $150 million at high valuations and pouring it into sales, you either can do something similar or be conservative and no longer matter.”

Photo: Bob Andres/Atlanta Journal-Constitution, MCT Archives

 

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