“Unicorn” has reached a turning point. Must adjust business model amid strict monetary policy

Reuters news agency reported on October 3, 2565 that the business model of unicorn companies which gives importance to growth from sufficient capital has reached a turning point This is because some major unicorns are struggling in the face of tight monetary policy abroad.

Masayoshi Son Chairman and Chairman of SoftBank Group said in a briefing on the company's August results that Meanwhile, listed stocks are in a difficult period. Unicorns will see a longer period of difficulty. This is in contrast to listed stocks that go up and down in reevaluation every day. Unlisted companies are re-evaluated on occasion, such as when raising capital, in anticipation of a decline in the stock price of a high-tech company.

In fact, the valuation of companies in which SoftBank Group invests has begun to fall. Klarna, a Swedish “buy now, pay later” startup, raised funds in July at a valuation that was 2564% lower than in 85. ByteDance, the owner of TikTok, which is a unicorn. The largest in the world It will carry out a share buyback, valuing the company at $3 billion, according to Reuters data, down as much as 25% from its valuation on unlisted exchanges last year.

Non-traditional investors such as SoftBank Group and Tiger Global Management began accelerating investments in startups in 2560 when interest rates were at record lows. Specifically, it uses large sums of money to increase the value of the company before recovering its investment.

But amid global inflation due to Russia's invasion of Ukraine and central bank interest rate hikes, Investments by informal investors have changed. Median value of startups that have raised Series E or later That's at least one in five at $1 billion in the January-June period, down from $5 billion in 2. And new unicorns are down as well.

Sebastian Siemiatkowski, CEO of Klarna, said: “We have spent a few years where growth has been a strong priority for investors. Now, it is understandable that they want to see profitability. The company has shifted its business to profitability, cutting 2 jobs, accounting for 3% of its workforce. and take a tougher stance on credit management.

Osuke Honda, general partner at DCM Ventures, who represents the calm reaction of many investors, said fundraising by startups is moving towards normalcy. This is because they have been able to raise too much capital in recent years.

However, startup valuations are undeniably lower. Not only does it reduce the value of shares held by founders and initial holders. but also the morale of employees, who often receive shares as compensation.

Miguel Fernandez, CEO of Capchase, an American investment company; Warned of downgrading the assessment. It is difficult for startups to maintain high valuations. If current market conditions continue with shakeouts, only strong companies will survive. Not necessarily at a disadvantage: Facebook (now Meta) was founded shortly after the dotcom bubble burst in the early 2000s, and the US financial crisis in 2008 paved the way for the founding of Airbnb.

The startup has entered the testing phase to strike a balance between long-term growth and short-term profits.

However, the term “unicorn” was first used in a 2556 article by US angel investor Aileen Lee. This refers to startups valued at more than $1 billion.

refer : https://asia.nikkei.com/Spotlight/Datawatch/Unicorns-growth-strategy-reaching-turning-point