Recently, “Dead Unicorns” have been the ‘talk of the town’ and there has been a question if they are facing trouble or are at the risk of becoming extinct.
As we know, “Unicorn” is a term that is used to describe a startup that is worth $1 billion or more. Similar to the fictional animal, these companies are also supposed to be magical and rare. But today, tech unicorns have become rather common and every startup is established with the aim of receiving the so-called unicorn status.
Before a month or two, The Wall Street Journal came up with a list of 78 companies who have hit the “unicorn” status. Most people presume that when a company hits the billion dollar club, it is stable and is moving forward on the path of sustainable growth. But that doesn’t seem to be true, observing the current market situation. So are we ready to accept the concept of “Dead Unicorns”?
In 2015, the San Francisco payments processor, Square stated that they were expecting the company to be valued $4.2 billion, which is a lot less than its original estimate i.e $6 billion. It was a reality-check for the 6-year-old company in last November when it priced its IPO at $9 a share, which was $15+ in the previous year.
There is a constant rise in the number of unicorns in past years, but there are indications such as Square’s IPO that the flow is getting slower. Many unicorns are not doing as good as they expected. What could be the possible reason behind this? Analysts suggest that unrealistic valuation could be the thing to be blamed while others think that excessive spending can be the root of the problem. Well, both of them can be true to some extent. But, we cannot neglect another major issue which is the cause of “Dead Unicorns” – failing to innovate in the competitive market with all these Silicon Valley startups.
Companies like Square and Dropbox have introduced really unique concepts to the market, but somehow they failed to continue their innovative approach while their competitors came up with some real innovations. Having a great idea is the base of any company, but continuously evolving their service or product with innovation proves to be the real challenge in the long term.