‘Risky investments’: Billion-dollar 'unicorn’ startups stampede Silicon Valley

When the social media software firm Sprinklr unveiled its latest funding last month, it vaulted into the club of “unicorns,” tech startups worth at least $1 billion. That came just weeks after Slack, which makes a business software collaboration tool, entered the group, which also includes well-known names like Uber and Snapchat. While unicorns are supposed to be rare mythical creatures, the proliferation of these billion-dollar startups has raised eyebrows as well as concerns in the fast-moving technology sector. More than 80 tech firms can now be called unicorns, according to a Forbes Magazine list.

These are incredibly risky investments. All of these firms are not going to get a multibillion-dollar buyout or massive public offering. I think we’re going to see a thinning of the herd.

Rob Enderle, consultant and analyst at the Enderle Group

The unicorns include a handful of startups worth at least $10 billion, a group sometimes called the decacorns. These include China’s Xiaomi, Airbnb, Pinterest and Dropbox, in addition to Uber and Snapchat. Some equity investors are getting nervous over the trend. Many startups have been able to raise cash from eager investors without heading to Wall Street for a public share offering. This also means the firms are not subject to the same scrutiny as publicly traded companies for their finances and governance.

I have absolutely no doubt in my mind that most of these individual angels and crowd funders are currently under water in their investments because there is ZERO liquidity for any of those investments. None. Zero. Zip.

Mark Cuban, an early dot-com entrepreneur