Silverton's Morgan Flager says 30% of unicorns will see valuation cuts - Business Insider

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WeWork and other top startups were cut down to size in 2019. This VC thinks 30% of the more than 400 other unicorns will soon see their valuations slashed too.

Morgan Flager thinks such companies won't be the last unicorns to be disgraced. Over the next three years, 30% of the more than 400 companies in the $1 billion valuation club will see their worth officially challenged as they raise new funding, predicted Flager, a general partner with Austin, Texas-based venture capital firm Silverton Partners.

Even though those industries are typically less profitable than the software business and investors generally haven't paid the same kind of premium for them as software firms, such "companies are getting [similar] kinds of valuations," Flager said.in particular has likely awakened investors to the folly of that notion, he said. In a funding round in January, SoftBank valued the real-estate giant at $47 billion.

The unsustainably high valuations of some unicorns have been driven in part by that mistake that some investors have made of confusing those companies that don't really deserve to be considered tech companies with bona fide tech firms, he said. But there are other factors at play.Much of the rise in the value of startups has come from the flood of capital into the private markets, he said.

 

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