WeWork leases office space. Lyft and Uber provide a car service. And so on. They all have a layer of technology and software integrated into their traditional product offerings, but they don’t have the same margins as a traditional software company.
On the private markets, the hyper growth of these companies and their promise to disrupt industries with software led to extreme valuations. But then the rationality and skepticism of the public markets kicked in. Uber, which had a private valuation of about $76 billion just before its IPO in May, now has a market cap of about $51 billion. Lyft's market cap is now about $12 billion, down from its last private valuation of about $15 billion.
There's a reckoning blooming in Silicon Valley now that several unicorns have failed to wow the public markets the way they did for VCs and private investors. It's likely why we've seen some companies like Palantir and Postmates push back their IPO plans until things settle down or they can figure out a better way to keep their valuations high.
But Axios business editor Dan Primack was skeptical that the poor performance of recent IPOs will cause much change among the VC crowd, since they're still attracted to companies with charismatic founders and enticing terms that give them sweet deals for investing. "It's not just that many venture capitalists went overboard on 'founder friendly.' It's also that, when push comes to term sheet, few investors will walk over terms if the deal and founder are hot enough.
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