Unicorns are killing off early Stage Investments

We hear all the talk about a bubble and yet we continue to see the Unicorn ranks grow,.  The fact is the bubble is here and just getting bigger.  It is not that the Unicorns will be effected as they will have the funding they need and can reach into the public markets even if they need to do a down round.  It is the rest of the Venture Funding that will suffer and the IPO market for sure.

The late stage investors are dominating the day.  A new report from CB Insights and KPMG, released Wednesday, examined venture capital activity in the third quarter of 2015.  The big takeaway: just 9 months into 2015, $57.9 billion has been invested into US startups.  to put this in context, that's already more than the total amount of venture capital funding invested into US startups in 2014 ($56.5 billion).

More Unicorns are born and Great Ideas Die Everyday

The third quarter of 2015 also doubled in the volume of new unicorns compared to the same quarter last year. There were an additional 17 US unicorns and 3 new Asian ones that p[opped up in the third quarter alone.  In total, according to CB Insights, there are 140 billion-dollar "unicorn" companies globally with a cumulative valuation of $503 billion.  this number is simply getting out of control.

Tech's unicorns have been growing at a rapid rate and staying private much longer.  While this may make sense on many levels the issue will be can they get enough interest at the public level to go public with such lofty valuations?

  We are already seeing Seed Investments dropping.  Currently Seed Investments are at a five-quarter low, CB Insights says. This may be due to an influx of late-stage deals and fewer IPO exits than in previous years.

Later stage investments are front and center and early stage investments are dropping to a dangerous level.  Having to continue to pump money into the unicorns will have a massive effect on companies being able to stay afloat as the early stages.  Many great companies and great ideas will be lost forever as we have seen in the past.

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