Electric scooter company Bird is said to be raising $250M from Sequoia at around $2 billion dollar valuation, just weeks after raising $150M on a $1 billion valuation and being valued at $300M earlier this year. Its rival Lime, raised $250M from GV a couple of weeks ago, getting both companies in the growing ‘unicorn club’ of 239+ privately owned companies valued at $1 billion or more.
When talking about valuations of private companies, we have to be careful not to put form over substance, said Fred Wilson “The valuation obsession”, one of the latest posts on his prolific blog. Valuations matter – to the media, who loves reporting on it, to the founders, who find it easier to attract talent when their companies raise rapid rounds at growing valuations and to the investors in companies like GitHub, who want to show the fantastic returns the delivered.
So it’s almost inevitable to talk about Unicorns, but I love Fred’s take on it:
It should work the other way around. I like to invest in companies that smart people are joining. Capital should follow talent, not talent following capital.
Valuations can be a sensitive topic way before achieving unicorn status. Mark Suster wrote a thoughtful post on how to talk about valuations when a VC asks, part of his excellent series on fundraising. Asking for a valuation is not meant to peg the price or cut the founders short. It serves multiple purposes from checking fit with the firm, understanding if the previous round was overvalued and assess the impact the round can have on the management team in case of a flat/down round. Recommended reading for founders.
One key point from Mark Suster when it comes to talking about the price of a financing round beyond ‘signalling’ expectations:
How you talk about valuation will of course depend on how well your business is performing and how much demand you have from other investors
Israel has grown several Unicorns of its own. Despite its relative size, there are currently 18 private companies started by Israelis with a valuation of $1 billion or more. Kudos to Yaron Samid, founder of TechAviv for putting together this list.
This doesn’t include Israeli startups that were acquired or went public (companies such as Mobileye, Wix, Waze, etc), but it does a long list of of Charging Ponies, as Yaron affectionally called them – companies that are well on their way to become unicorns.
If you want to feed your unicorn obsession, check out these resources:
- CB Insights – The global unicorn club
- Crunchbase – Unicorn leaderboard
- Fleximize – The speed of a unicorn
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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