Forecast For Unicorn Exits: Cloudy With A Chance Of Non-Tech Acquirers by Mikey Tom, PitchBook
Last year the entire industry’s attention was caught by the rapid proliferation of unicorns; companies that raised rounds at $1 billion+ valuations. Founders were cashing in while the market was hot and venture firms were seeing their portfolio values skyrocket—at least on paper. In the midst of the raging party, some more level-headed minds were timidly wondering, how are these investors expecting to get returns? The cash has to flow back to VCs and LPs at some point, after all.
Looking back, there haven’t been that many $1 billion+ exits. 2015 saw just 19 exits valued that highly across North America and Europe, while 79 financings were done at $1 billion+ valuations. This year is not instilling much optimism either. Through 1H, just four exits with values over $1 billion had been completed.
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That figure, though, does not include the recent Dollar Shave Club sale, as well as last week’s announced acquisition of Jet.com, both of which are yet to close but shed light on what may be a saving grace for some unicorns. Dollar Shave Club was purchased by Unilever, a consumer goods company that owns familiar products such as Dove and Lipton, while Jet.com was bought by retail giant Walmart. Perhaps moving forward, we’ll see more large exits come from outside the tech sector?
That said, even with those two deals factored in, 2016 is trending toward a lower number of $1 billion+ exits than last year. And while it’s still too early to make any judgments, and a lot of the unicorns should still have a decent amount of cash in the bank from their large rounds, the low exit numbers are a bit troubling.
Curious to learn more about venture capital exit trends? Check out our free VC Liquidity Report!