cloud network hunting note: VC always likes to show off how much he invested in a “$1 billion valuation of unicorns startup”. In fact, “unicorn” is often just nice name. According to the statistics found that VC investment “unicorn”, only 25% of the company can grow up to be “the dragon”, bring more than double the rate of return for the VC.
Cowboy Ventures, the founders, Aileen Lee last year for TechCrunch wrote an article called “welcome to the unicorn club”. The article USES a large amount of data, vivid to we introduced the risk investor support unicorn – in public or private market value more than $1 billion of American software company.
when her analysis is so exciting, so that the venture capitalists, people mention in their mouth are unicorns how…
yes, cultivate a unicorn is not imminent. Facebook, Twitter, the Active Network and Cameron Health companies such as brilliant behind contains more than 15 vc and investment group in the heart.
at the same time, the Chegg, bursts, Kayak, or co-workers, Nest Labs, such as Investors and Pandora A10 company also has a group of Investors. They proudly show its unicorns, to show their unique to investment. Average each unicorn company will be “adopted” by seven different investors.
the problem is, I see the dark side of the unicorn: gradually to support the company’s venture capitalists and the limited partners limited to pursue for unicorn company logo. But the idea could erase their returns.
entrepreneurs and investors
as a are entrepreneurs raise venture capital, one thing is the key, that is why the in the mind be clear risk investors will be interested in your company. In this way can you find can bring you the best interests of investors.
a few weeks ago, I chat with an old friend. He is a top investment fund limited partners. He is proud to say that in the past three years, 40% of capital out of their funds to a unicorn. I congratulate him, and asked him how the investment returns.
he didn’t speak. The silence shows a problem: not all unicorns investment can bring rewards for limited partners, and sometimes even return is very small.
we should more to celebrate those who create the unicorn successful entrepreneurs. After all, they are the stars of the create a $1 billion company, and we risk the most of the time is just the play PeiJiaoEr investors. We should also take a look at those who claim to be the best unicorn hunter’s investors, what are their motives and return on investment?
which venture capital investment unicorn company finally return not enough? We could have a bold guess, but here we use a less accurate method to calculate the: if the risk investor to invest in a market capitalisation of $1 billion, a successful company in 10 million to $25 million, so he can get a 0.5% stake in the company. Then do what’s the point? Aren’t the only to your own website a unicorn company label?
there is a famous golf proverb, called “a wood to person, and push rod play can make money (Drive for show, putt for”) “. I think for limited partners and venture capitalists, investment unicorn company, especially in the later investment, like to play golf with a wood. But if that is the case, how to play well in the vc industry vital rod?
is very simple. Cross the unicorn, turn your eyes to find the dragon. Unicorn is to show off, but catch the dragon is caught.
dragon investment returns more
the dragon is that the multiple investment company. Venture capitalists could receive its come, will be the dragon as a limited partner has unicorn. But if you carefully calculate (we did), you will find that the number of the dragon company only unicorn, a quarter of the company.
although the dragon company is worth more than a unicorn company, but with the expansion of the venture capital fund, we become more and more difficult to find this kind of company. The reason is simple.
unicorns can pack a facade, while the dragon can bring money.
you can’t for a late in the development of dragon company to invest, because at that time it the rest of the ascension space could not double return for your investment. Dragon investment company is the best in his early, but you can always invest a unicorn company.
for venture capitalists and the limited partners, to determine a dragon company from several unicorn is not an easy thing. Other investors do not willing to share with you, will only let you stay, take a look at those beautiful unicorn company logo.
in order to quantitative analysis of our reasoning, we made a set of data, which statistics from January 2004 to June 30, 2014, the emergence of more than $1 billion in capital to exit (not including unlisted company). We can know how many dragon company in this period.
in these ten years, there are about 62 unicorn support of venture capital companies, when they were in the public or mergers and acquisitions in the market value of more than $1 billion. This 62 unicorn companies won the 451 investment, including 339 investment from 74 different traditional venture capital fund.
in this 62 unicorn companies, only 17 is the dragon, that is only about a quarter of the company can bring double for their venture capitalist’s return on investment.
so, not all the unicorn is a dragon. In fact, most of the unicorn is the dragon.
the 74 risk investment unicorn hunter’s performance? In their 339 unicorn investment, gave birth to the dragon company only 21 times. Therefore, investors can be summed up: for four times the unicorn investment to get an opportunity to get to the multiple. Over the past 10 years, 339 times the risk of investment, only 21 times (about 7%) got such a good luck.
this dragon 21 investment company “lucky” including sequoia Capital, Greylock Partners, spark Capital, gather, matrix Partners, Charles River, Union Square Ventures, Accel Partners, Benchmark Capital, etc.
three vc commended by god visit:
1. Sequoia capital to invest the four dragons (WhatsApp, FireEye, Palo Alto Networks, LinkedIn)
2. The Union Square Ventures have 3 times (Twitter, bursts, company)
3. Greylock Partners have 2 times (Palo Alto Networks and Facebook)
the same situation in other conditions, who are more want to invest in a dragon instead of a unicorn!!!!