The Risk of a Billion-Dollar Valuation in Silicon Valley - The New York Times

The word of the day, from an VC dynamics reality check: "unicorpse"

"That protection, however, may not just be driving up valuations. Liquidation preferences can come back to bite a start-up’s founders if valuations come down.

Higher valuations create higher expectations, and failure to meet them can set off a downward spiral and a forced sale. In that event, the venture capitalists are paid first, leaving “unicorpses” in their wake and the founders with nothing.

The recent season of the HBO comedy series “Silicon Valley” portrayed just such a situation: A founder of a dead start-up received nothing in a sale as a result of a liquidation preference, and was left crying that he “could have taken less money.”"

The Risk of a Billion-Dollar Valuation in Silicon Valley - The New York Times