Do IPOs Show Unicorns Or Unique Cons?
Rajeev Mudumba
Entrepreneurial Growth Strategist | HealthTech Executive | Startup Advisor | Podcast Host
It’s no secret that Silicon Valley of the West and the East are home to some of the most innovative and disruptive companies in the world. But, what’s often overlooked is the fact that many of these companies are unicorns — meaning, they’re privately held and not listed on any stock exchange.
So, when one of these unicorns decides to go public through an IPO, it’s a big deal. Not only is it a sign that the company is doing well enough to warrant going public, but it also means that investors are confident in its future prospects.
However, there have been some recent IPOs that have left investors wondering if they were investing in a true unicorn or just being taken for a ride.
Take, for example, the much-anticipated IPO of WeWork. The shared office space company was once considered to be one of the most valuable startups in the world, but its IPO was met with skepticism from the get-go. And when it finally did go public, its stock price tanked, leaving investors wondering if they had been duped.
The same can be said for other IPOs like Lyft and Uber. Both companies have been pushed by investors to go public, but both offerings were met with tepid response at best. And while both companies are still working on doing well, it’s clear that they’re not the unicorns that investors thought they were. Same is the case with Paytm and Zomato and many other so called unicorns from India. And, let’s not even get into the SPAC companies that merged with disruptive EV innovators to lead them public.
So, what does this all mean? Are unicorns real or are they just cons? Are these companies going IPO for initial investors and management teams to come out wealthy at the cost of the public markets?
The answer is probably somewhere in between. There are certainly some companies that are true unicorns and have the potential to change the world. But there are also those that are nothing more than overhyped startups that are destined to fail. The key for investors is to be able to distinguish between the two. And, that’s not always easy.
When a company goes public, it’s a sign that it’s made it. That it’s a big deal. But is an IPO really a sign of success?
For years, the answer seemed to be "yes". A company that could go public was automatically seen as a valuable “unicorn.” But recent years have brought some major IPOs that have fallen flat, making many question whether or not an IPO is really a sign of success.
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So what does this all mean? Are IPOs really a sign of success, or are they just a way for companies to cash in on hype? It’s hard to say for sure. But one thing is certain: an IPO is not a guarantee of success. Companies need to be careful about how they approach going public, and investors need to be aware of the risks involved. Else, the public may have overvalued companies on their hands through IPOs, just to be left with nothing after the fact.
Unicorns are mythical creatures, but in the business world, they’re very real — and they’re often prized for their rarity. The term “unicorn” has been used to describe companies that have achieved billion-dollar valuations, and many of these companies have been startups that have raised a significant amount of venture capital.
Some of the most well-known unicorns in the tech industry include Airbnb, Uber, and Pinterest and so many more. These companies have all achieved billion-dollar valuations, and they’ve all raised a tremendous amount of venture capital. But are these companies really worth their lofty valuations? And more importantly, are they sustainable in the long run?
Many experts are skeptical of unicorns, and for good reason. A lot of these companies are loss-making, and they’re heavily dependent on VC funding. What’s more, many of them have yet to prove that they can generate consistent revenue streams. So while they may be unicorns now, there’s no guarantee that they’ll stay that way.
So if you’re thinking of investing in a unicorn, be sure to do your homework. And remember, just because a company is rare doesn’t mean it’s necessarily valuable.
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