Tuesday, October 20, 2015

Tech Startups Feel an IPO Chill - WSJ

From a stark unicorn market dynamics reality check

"In one way, Dropbox suffers from being compared with rival online storage firm Box Inc., which went public in December, according to investment bankers. Box has a stock-market value of $1.65 billion, or less than six times its expected fiscal 2016 revenue. Dropbox would need revenue of roughly $2 billion to support a similar valuation in the stock market, but one investment banker estimates the company’s revenue is likely to hit just $500 million this year. Dropbox declines to comment on its revenue.

“The thing that worries me the most about all these [billion-dollar valuations] is that you need a public market to get liquid,” says Chris Douvos, managing director of Venture Investment Associates, a Peapack, N.J., firm that invests in funds and startups. “But who’s going to buy at these valuations? It’s all priced for perfection.”"
Tech Startups Feel an IPO Chill - WSJ
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