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Given what we’ve seen recently concerning the late-stage funding market, we shouldn’t be shocked. As late-stage dollars retreat and capital served up in mega-rounds — deals worth $100 million or more — evaporates, the fuel that once lifted many a startup rocket into the valuation stratosphere has sputtered. It makes sense that fewer companies would reach unicorn-altitude. Initially, I wanted to make an argument crossing falling M&A activity and initial public offerings with the decline in new unicorn creation, pointing out that without the ability to exit, of course the pace at which new unicorns were created would fall. If paper marks failed to turn liquid, paper marks would become worth less, right? The Exchange explores startups, markets and money. Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday. That’s too generous an interpretation, because it rests on the assumption that the unicorns minted in the past were actually worth what they were purported to be. Missing Attachment Let’s take the argument one step further: If most unicorns did not exit during the boom and now cannot do so with their real valuations being lower than their last private mark (and is likely under the $1 billion threshold today), was the startup in question ever really a unicorn? I would posit that the answer is no. Most unicorns never were what they were purported to be. Instead, a lot of startups were granted big budgets to LARP as unicorns thanks to outsized venture capital funds, in turn predicated on a combination of low interest rates and a choppy global economy brought on by COVID. Don’t believe me? Check this chart from the new CB Insights Q1 venture report:

Turns out most unicorns today are more myth than reality by Alex Wilhelm originally published on TechCrunch


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