UAE startups. Construction tech investors. A note to unicorn employees.
Unicorn common stock? Good luck.
Fred Wilson’s 2017 predictions are a fun read (see The Blurb). They’re historically about 50% right per Fred so don’t take them as gospel, but they’re interesting, cover a lot of ground, and are thought-provoking.
But one of his predictions is that there will be more tech IPOs in 2017 than there were in 2000.
While it’s not as bold, prescient, or fun to take the other side of this prediction, there is zero chance of this happening.
Public markets are more discerning, i.e. cr@p companies can’t go public as easily
Being public is way “less fun” than it was in 2000
The access to private capital that exists now from hedge funds, mutual funds, etc didn’t exist in 2000 and so serves as an alternative to going public
Of course, there is some fatigue setting in with those later-stage private capital sources as we detailed in our Tech IPO Pipeline Report and this decreased interest from them should be a tailwind for the 2017 IPO market.
So yes, it will definitely be a better year for tech IPOs.
It couldn’t get much worse than 2016.
So that’s not much of a call. But reaching 2000 levels, no chance.
With CES just a day away, we put together a list of 10 key companies to watch. To access the full list of exhibitors at the show, check out the public collection, CES 2017 Startups, on the CB Insights platform.
Anova, maker of an automated sous vide cooker, featured below.
Unicorn employees — beware
Scott Belsky (@scottbelsky), entrepreneur and venture partner at Benchmark, recently penned a great post (see the Blurb) talking about the things to look for when evaluating your unicorn company job offer and options. It is worth a read.
And the questions you need to ask are complicated as you’ll see in Scott’s post. And unless you are very senior, it is unlikely you can get all the data and answers from the company.
To give you a sense for how complicated the stock option puzzle is for a unicorn, we took a look at enhanced valuation data on CB Insights where we dig into state filings.
Let’s take 23andMe for example.
Their profile (screenshot below) highlights a senior liquidation preference and some of the summary terms we pull from the filings.
Section 6 on Restrictions and Limitations where they detail the protective provisions was a 1/2 page in their first COI from May 2007. In the recent filing, you’ll see it’s a good bit longer.
This is the case for most unicorns and in some sense, it makes sense given how much capital they’ve raised. The problem as you read these docs beyond their utter and insane complexity is where employees fall in the pecking order. Hint: the bottom.
Go read Scott’s post if you’re thinking of working at a unicorn and if a big part of your calculus is the equity.