The CB Insights Study: Large Technology Companies Are Not Ready To Buy “unicorns”

In the list of companies-“unicorns” (startups, which reached $1 billion or more, and in which invested venture capital investors) at the beginning of August 2016 included 168 companies, the overall valuation of approximately $600 billion, says CB Insights. “In the technology industry is now more “unicorns” than ever. However, large companies do not show interest in buying them. And its not because they generally do not acquire,” — says CB Insights. The analyst firm cites statistics for the first half of 2016.

Only this time in the technology industry has been made 21 purchase of private companies valued at more than $1 billion, and only two of them were “unicorns”. “Investors have invested in “unicorns” billions of dollars — it is logical to expect that they are interested in the outputs of these companies. And if the exchanges are still going on some activity, startups go to IPO, the bright acquisitions of such companies in the first half of 2016, almost did not happen.”. “This does not mean that for a large technology company, there are no buyers. For the first half of 2016 was made 21 deals with private it companies worth at least $1 billion — one company acquired the organization as a whole, other bought control of companies over $1 billion and more.

Others were acquired at a price startups that have not reached the cost of $1 billion during its last investment round, there were not “unicorns”. So the problem is not the lack of buyers — but a lack of desire to buy “unicorns”,” concludes CB Insights. According to the analysts at CB Insights, the current situation should not surprise the representatives of the technology industry. “Boom “unicorns” was in 2015.

The investors and the founders believed that the status of “unicorn” will help the company to attract media attention and to gain the teams most talented employees. However, the lack of large exits, market volatility, macroeconomic problems and the precariousness of some “unicorns” have prompted investors to hit the brakes”. Profitability, positive cash flows, the use of unit-economy is what is fashionable now. Investors and buyers are no longer interested in growth at any cost.

Most startups-“unicorns,” writes CB Insights, in 2016, began to talk about how soon they will be able to become profitable — on its efforts to eliminate companies in the profit reported by the heads of Dropbox, Zomato and other projects. Among those companies that focus on rapid growth, says CB Insights, will retain its evaluation only a few (perhaps such projects will be Airbnb, Uber, Snapchat and so on). Others should prepare for revision or to revise its own strategy. “As shown by the first half of 2016, buyers in the market have.

They are simply interested in better deals. “Unicorn”, which focus on absorption, you should be ready that they will buy at a lower price. This may be a prudent step for startups and investors,” concludes a study from CB Insights.

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