WeWork became a VC Unicorn, then lost its luster as investors realized the company was a financial sieve.
Theranos became a VC-Unicorn ostensibly based on a science breakthrough from a freshman dropout with no science background whatsoever. After raising a ton of capital and being celebrated by presidents and the Silicon Valley mob, it turned out there was no “there” there.
Sam Bankman-Fried is the latest incarnation of the fallen VC-Unicorn. He raised billions with ‘smart’ money, and also from the general public. It seems that Bankman-Fried was a student of WC Fields who said:It’s morally wrong to let a moron keep his money.”
All of the above achieved the coveted VC unicorn status bestowed by VCs on companies that hit $1 billion in VC valuation – and failed. And they probably won’t be the only ones to become VC-Unicorns and fail.
There are 2 types of unicorns: VC unicorns and real unicorns.
VC-Unicorns can be Chimeras of value. They are vcompanies reaching magical billion dollar VC valuation status in the latest VC round. At this stage, the media is raging frantically about the entrepreneurial geniuses and especially the “smart” money behind them. Achieving VC-Unicorn status is seen as a sign of success in a venture, and entrepreneurs looking for growth seem to place a high value on it. But this valuation can be adjusted if the company fails to meet its targets.
You too can build a VC-Unicorn – in one week (as I mentioned before). Yes, you read that right. You too can make a VC-Unicorn in just a few days. The value of the company in a VC round can be easily manipulated with the right deal and financial instruments. Anyone can make a billion dollar unicorn in a matter of days and this link shows how anyone can do the same. Let me know if you follow these steps to build your VC-Unicorn. It would be great to keep track of the brilliant minds following this unique strategy of starting a VC Unicorn.
Real unicorns have real content. A Real-Unicorn is a business that has been built from scratch to a value of over a billion dollars – and sales. To create a venture with a billion dollar revenue and valuation, the business and the entrepreneur need substance, and it does mean that the entrepreneur has landed a substantial number of paying customers in addition to reaching the highly desired valuation level.
The proportion of VC unicorns to real unicorns: The growth in VC would have resulted in 1,000 unicorns as of May 2022. But many of these VC Unicorns have failed, will fail, or suffer down rounds with some estimates around 90%, and many VC-Unicorns are flipped for unicorn ratings without ever reaching Real-Unicorn status. A multi-billion dollar venture can be a trophy for the VCs and the entrepreneurs, but painful for the corporate buyer. According to the Harvard Business Review, about 70 – 90% of all acquisitions fail – many corporate buyers make bad decisions. So do flips have real value or chimeric value?
Entrepreneurs can benefit by judging VCs by their track record of creating real value, not chimeric value, as many VC Unicorns are only possible when the stock market is in a bubble. And it’s hard to predict the timing of the next bubble. This also means that the entrepreneurs have to get behind the wheel and get interest from multiple VCs in order to choose the right one. To get multiple offers, they need unicorn skills to get to leadership Aha when VCs can see the true value of the company and the entrepreneur. This is what entrepreneurs like Jan Koum (WhatsApp) and Mark Zuckerberg (Facebook) did.
MY TAKE: VC Hype Can Negatively Affect:
Entrepreneurs who might have done better by learning the skills and strategies to get off the ground without VC and control the business and the wealth created, but who were convinced to seek VC and failed, and
Business school students who could benefit from learning the Unicorn-Entrepreneur model to build real unicorns by taking off without VC instead of the VC method which helps about 20 out of 100,000.
Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.