http://inflation.us/silicon-valley-unicorn-bubble-next-to-burst/
When a private venture capital (VC) backed start-up successfully raises a round of funding at an implied valuation thatequals or exceeds $1 billion – it becomes a “unicorn” company.
Currently, the largest US unicorn is Uber, which now has an implied valuation of $50 billion. Uber is estimated to have trailing annual revenue of only $415 million. This values Uber at an insanely high multiple of 120X revenue!
The unicorn with the highest valuation/revenue ratio is Snapchat, a company that is currently worth $16 billion, despite estimated annual revenue of only $1 million. Snapchat is being valued at a shockingly high multiple of 16,000X revenue!
America’s 15 largest unicorns are currently worth a combined $189.9 billion, despite these 15 companies having total trailing annual revenue of only $4.54 billion. As a whole, the top 15 largest US unicorns are being valued at an unjustifiably high multiple of 42X revenue!
Separately, it becomes very apparent and undeniable that unicorns have become America’s #1 most overinflated asset bubble! America’s top 15 largest unicorns are now being valued at a dangerously high median multiple of 69X revenue!
Snapchat not only has the highest valuation/revenue ratio of 16,000 – but it also has the highest valuation per employeeof $400 million! America’s 15 largest unicorns are currently receiving an unprecedented median valuation per employeeof $17.5 million!
There is now a new record high of 76 unicorns that have their headquarters located within the US. America’s unicorn count has increased during every single month of 2015 – with a total year-to-date net addition of 27 unicorns, up 50%from a net addition of 18 unicorns during the comparable year-ago time period of January-August 2014!
US based unicorns are currently receiving a total implied valuation of $285.5 billion! This is up an amazing 102.63% on a year-over-year basis from their total implied valuation of $140.9 billion at the end of August 2014! The average unicorn is now worth $3.76 billion, for a year-over-year increase of 25.33% from from an average valuation of $3 billion at the end of August 2014!
It will be interesting to see just how badly unicorn valuations are negatively affected by the recent dramatic decline in publicly traded US stock valuations. Although VC funded start-ups are remaining private longer than ever before – as a result of their easy access to venture capital – most unicorn shareholders still plan to eventually exit through IPOs!
On average, VC backed companies sell 20% of their total shares outstanding in IPOs. Therefore, the 76 US based unicorns that are worth a combined $285.5 billion, will need to attract $57.1 billion in IPO investment capital from Wall Street.Over the trailing twelve month period, VC backed IPOs raised a total of only $11.91 billion!
It will take approximately 4.79 years for VC investors in America’s 76 unicorn companies – to exit their investmentsthrough IPOs. The estimated time needed for all US unicorn firms to exit through IPOs is now 3.71X longer than in January 2014!
