Initial public offerings set a new record last year. The trickle down effect means a funding boom for the start-ups that hope to become the next Coinbase or Robinhood. CBInsights reports 959 unicorns are now valued at $1bn or more. The majority are US tech companies. Many are headed for public markets.
Amid the record-breaking numbers expect to see some moderation in valuations this year. After an initial bump, shares in some of last year’s most widely anticipated market debuts have taken a sharp downturn. Some trade below their listing price, including Coinbase.
A broad sell off in tech stocks over the past month is likely to weigh on the valuation multiples of the companies pursuing growth at any cost. Tesla boss Elon Musk has made his feelings about soaring start-up valuations clear, tweeting that if history is any guide, not many unicorns will make it through the next recession.