The Unicorn Boom Is Over, and Startups Are Getting Desperate
The billion-dollar startup bubble is deflating, and more than $1 trillion in value is locked up in companies with dwindling prospects.
As hard as it is to remember, there were buzzy startups in Silicon Valley before the tech world became solely fixated on artificial intelligence. By the time the Covid-era tech boom crested in 2021, well over 1,000 venture capital-backed startups had reached valuations above $1 billion, including fake meat purveyor Impossible Foods Inc., home maintenance marketplace Thumbtack and online-class platform MasterClass. Then came a squeeze sparked by rising interest rates, a slowing initial public offering market and the feeling that any startup not focused on AI was yesterday’s news.
A reckoning that has been looming for years is becoming painfully tangible. In 2021 more than 354 companies received billion-dollar valuations, thus achieving unicorn status. Only six of them have since held IPOs, says Ilya Strebulaev, a professor at Stanford Graduate School of Business. Four others have gone public through SPACs, and another 10 have been acquired, several for less than $1 billion. Others, such as the indoor farming company Bowery Farming and AI health-care startup Forward Health, have gone under. Convoy, the freight business valued at $3.8 billion in 2022, collapsed the following year; the supply chain startup Flexport bought its assets for scraps.