September 30, 2019
Indeed, those like Aggarwal believe many of these unicorns were “given a little bit of a free hand.” She maintains investors are going to be keeping a closer eye on private companies’ business plans and losses—and Santosh Rao, head of research at Manhattan Venture Partners, suggests that, especially after Uber’s and Lyft’s “hype and then bust,” investors have become very cautious. “Now they’re reading the fine print, they’re not just looking at the revenues,” he says.
“I think [private investors are] going to realize that there’s not going to be that big bump that you get at the IPO, there’s no guarantee,” Rao says. “Because some people come in late, either they should have a very long time horizon, or they think they’re going to get a big pop at the IPO, … but I think now you’ll see that the incremental investor in the later rounds will be more cautious, will know that the exits may not be rewarding, or the upside may be limited when they go out, so they’ll have to either wait or make sure that the company has a solid business model [and] that it can withstand the scrutiny of the public market that is going to be very intense.”Read Article
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