Of Unicorns and IPOs

2019 was supposed to be the year of the unicorns. There was great expectation for the IPOs of high-profile startups such as Uber and Lyft. But how did these and other top ex-unicorns perform in their debut year? What can this tell us about the current startup scene?

Of the 10 largest unicorns that IPO’d in 2019, only three – Zoom, Peloton, and Luckin Coffee – had positive returns at the end of the year, and only one of them – Zoom – is profitable

The median return of the 10 largest ex-unicorns this year was (18.8%). Meanwhile, the S&P 500 had a median return of 11.2% during the same periods. I know you can do math, but that’s a 30.5% percentage difference. Let that sink. Whatever happened to the promising unicorns?

Something is bubbling up in the startup community… the realization that pumping loads of cash to any type of business model, neglecting fundamentals and profitability on the way, may not be the best idea after all.

Even if its returns were far from impressive this year, Zoom, may be a good example of the resurgence of profitable companies with somewhat sustainable fundamentals…

Should we start referring to these sort of companies in a different way? Something that will re-legitimize firms that do not follow the unicorn-way and open the door for different methods of creating great companies? More forthcoming soon…

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