I don’t know if this is just a massive correction or the entire market is going to slide into bear territory, but if it does go into a bear market…
I would hate to be the CEO of Uber, AirBnB, Snapchat, or any other unicorn. These guys are bleeding more cash than M.C. Hammer in the early 90’s and courted investors with rags-to-riches dreams of successful IPO launches. We are no longer in the days of interest rates at zero, a carefree stock market, and venture capitalists with nothing better to do than throw money at something with the word “disruption” in it.
If you are going to go public you do it while everyone is drunk and dancing stupidly in an overvalued bull market. You sure as heck wouldn’t want to launch a company like Zygna during a recession. Many of these companies (Snapchat, Uber) were already prepared to go public, they just didn’t feel the market was receptive. So that brings up the point that if things get darker, there are two options:
A) If you won’t go public, you need to get more venture capital. It’s tough to get venture capital if investors don’t think they can cash out. If investors can’t cash out, they won’t risk anymore. Without money you’re done and hopefully a nice dim-sum restaurant can open up in your failed app’s San Francisco office space.
B) You don’t want to go public, but existing investors want to cash out. You are forced to go public, but you do it in a terrible market. You launch an IPO for a money losing company to a jittery crowd. Your market cap shrinks, existing investors get burned, and hopefully a nice dim-sum restaurant opens up in your office space when you downsize.
*Disclaimer, invest at your own risk. Do your own thinking before you put money down. Pretty much anything that would be on Goldman Sach’s disclaimers applies here, so don’t sue me.