Bits: Potential Unicorns, Meet a Rough Market

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Monday, August 24, 2015
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Potential Unicorns, Meet a Rough Market | Stock markets around the world plunged last week, capped off on Friday when some benchmark indexes had their biggest losses in years, partly from turmoil in China. Tech stocks did not escape the fall, with some companies being hit particularly hard, including Netflix, which tumbled more than 16 percent over the course of the week. Twitter, which has been on a slide for a few weeks, ended the week below its I.P.O. price. The selloff in global markets continued on Monday.

Only someone with a DeLorean time machine can say with authority whether the fall was a temporary correction for an overheated market or a sign of further and more painful declines to come. Already, though, there are grumblings that the downturn could alter the booming tech industry.
Bill Gurley, a venture capitalist at Benchmark, fired off a series of tweets last week about the market stumbles, mincing no words. “One might reasonably assume,” he wrote, “that this would have an adverse impact on late stage private market liquidity and valuation. I certainly do.”
He added: “We may be nearing the end of a cycle where growth is valued more than profitability. It could be at an inflection point.”
Which companies might be affected the most? It might not hurt to start by looking at the 50 companies listed by CB Insights as the most likely potential “unicorns” – those companies with valuations over $1 billion. CB Insights, which tracks venture capital and start-ups, created the list using software that analyzes dozens of factors about a start-up.
As Katie Benner writes, many of the trends spotted by CB Insights won’t be particularly new to followers of tech industry news. International companies – particularly from India and China – are on the list. So are delivery companies like the British food delivery start-up Deliveroo and Postmates, which delivers goods from any store or restaurant.
Given China’s economic turmoil and the high cost of operating delivery services, the companies in those areas will definitely be worth keeping an eye on in the coming weeks and months.


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