The Unicorn Boom Is Over
The billion-dollar startup bubble is deflating, and more than $1 trillion in value is locked up in companies with dwindling prospects. As hard as it is to remember, there were buzzy startups in Silicon Valley before the tech world became solely fixated on artificial intelligence. By the time the Covid-era tech boom crested in 2021, well over 1,000 venture capital-backed startups had reached valuations above $1 billion, including companies like Impossible Foods Inc., Thumbtack, and MasterClass.
A reckoning that has been looming for years is becoming painfully tangible. In 2021, more than 354 companies achieved unicorn status with billion-dollar valuations. However, only six of them have since held IPOs, according to Ilya Strebulaev, a professor at Stanford Graduate School of Business. Four others have gone public through SPACs, and another 10 have been acquired, several for less than $1 billion. Others, such as Bowery Farming and Forward Health, have gone under. Convoy, a freight business valued at $3.8 billion in 2022, collapsed the following year; its assets were bought by Flexport for a fraction of that value.
The squeeze was sparked by rising interest rates, a slowing initial public offering market, and the feeling that any startup not focused on AI was yesterday’s news. This shift has left many startups struggling to survive, with some failing to adapt to the new landscape. The collapse of these unicorns serves as a stark reminder of the challenges facing the startup ecosystem in a rapidly changing tech world.
