SoftBank Cautions Longer Startup Winter Because Unicorn Founders Are Unwilling To Cut Valuations (techcrunch.com) 33
Masayoshi Son, founder and chief executive of SoftBank Group, which reported a quarterly loss of over $23 billion, is worried that the funding winter for startups may continue for longer. From a report: The 64-year-old executive, whose Vision Funds have backed over 470 startups globally in the past six years, said on Monday that some unicorn founders are unwilling to accept lower valuations in fresh funding deliberations, an assertion that has led him to believe that the "winter maybe longer" for unlisted companies. Startups across the globe are facing a sharp crunch in funding as investors grow cautious about the market conditions -- despite many of them raising record amounts of funds in recent months.
"Unicorn companies' leaders still believe in their valuations and they wouldn't accept that they may have to see their valuations [go] lower than they think," he said, according to company's official translator. "So until the multiple of listed companies is lower than those of unlisted companies, we should wait," said Son, referring to a popular way investors assign value to firms. He said the winter for publicly listed companies is still continuing, but a similar downturn for startups may last "longer."
"Unicorn companies' leaders still believe in their valuations and they wouldn't accept that they may have to see their valuations [go] lower than they think," he said, according to company's official translator. "So until the multiple of listed companies is lower than those of unlisted companies, we should wait," said Son, referring to a popular way investors assign value to firms. He said the winter for publicly listed companies is still continuing, but a similar downturn for startups may last "longer."
Want a little Camembert with that Whine? (Score:1)
I don't believe my soon-to-fail company is worth less than you think it is - I want more money so I can sell out faster!
Which do you believe gets the most investment capital?
The slick content-free buzz-word laden presentation or the deeply technical back-of napkin one?
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I don't know, but after reading the headline, I know what side the contributor of the story is on.
Your Ego for the Win! (Score:4, Insightful)
Don't let facts, and the numbers get in the way, Your Ego is what is important. If they don't fund you for what you think you are worth, it must be those other guys who are just too stupid to see your big picture. Sure the Math doesn't add up, and your business plans has some large assumption leaps. But it is more that that, you deserve the big valuation because You are so awesome, and your business will be awesome because of you!
Re: Your Ego for the Win! (Score:2)
Re:Your Ego for the Win! (Score:4, Insightful)
Its not hard to understand. That has been the argument used for about the last 15 years and everyone has been totally cool with it up until very recently.
The narrative on the other side of the table was - debt is so cheap WTFN, if this flyer pays off we still make a mint if it doesn't the next will make us mint.
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The majority of these founders will probably regret turning down the opportunity to become deca-millionaires instead of middle class, but maybe a couple will write in their memoirs about they day they almost settled for being deca-millionaires instead of billionaires.
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While things are going up it doesn't matter what the reasoning it. Even if 1 investment wildly succeeds while 99 others failed, it's still a win to go with your gut feeling. But when things aren't going up, then the investors stop and think about things. So that guy out there that says he'd seen a unicorn in the wild, and if he captures it then there will be billions in revenue from the poop alone, maybe you just let that one incubate a bit longer instead of throwing money at it while yelling "take it!"
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This is the story of crypto.
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LOL, you seem to be channeling the founder of WeWork, one of SoftBanks' most visible mistakes.
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And eventually if you refuse funding at what the market is offering, your startup may just have to close shop.
Hopefully you will go broke as you did not get to IPO stage.
Translator (Score:2)
I think that their official translator doesn't work right. I still don't really know what's going on here. The whole thing sounds like buzzword bingo.
Re:Translator (Score:5, Insightful)
Companies that convinced some idiot to pay $100 million for 10% don't want to sell the next 10% for less than $100 million.
Finance stuff has to sound all fancy because one of the largest industries in most developed countries is having someone explain it to you.
Ponies (Score:2)
Re:Translator (Score:4, Interesting)
Son often speaks in complex bullshit sentences.
He tries to sound distant and oracular, when actually he just has the brown touch: his huge investments turn to shit.
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They were funded in the past for a lot of money per share (private shares). They got say $50 million a couple years ago. Now they want $50 million more because the foozball machines are broken and the private jet need maintenance after being hangared during the pandemic. So the investors are saying "We think you're only worth 50. Yes, dollars. Yes, those paper things. No you can't just write more zeros on it. No, don't wipe your tears with it, you'll get pinkeye."
first phase of 5 phases of loss (Score:1)
This is what it looks like when people are faced with loss.
The same thing is happening in the housing market, same thing is likely going on in many other markets, bitcoins for example.
Next one is anger.
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This is what it looks like when people are faced with loss.
The same thing is happening in the housing market, same thing is likely going on in many other markets, bitcoins for example.
Next one is anger.
I'm not familiar with Unicorn or softbank, but so much of what I see looking for startup funding is some pretty bogus stuff, especially in the technical fields. We have 3-D animations that make a lot of stuff appear to be real, with nutty ideas like drawing large amounts of water from desert air, or funky energy storage systems made of concrete blocks, massless batteries, Drone type transport for people, and other whackadoodle grifts that sound awesome until you give it a little thought - which many don't.
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No, people do not learn, what is happening today happened thousands times before all over the world just on a smaller scale. People do not learn, societies (systems) adjust but eventually societies also lose useful information and problems repeat. Some people understand any situation (maybe it is intuition, but what it really is, it is analysis and reduction of complexities to basic rules of economics and human behaviour).
For example it is clear that democracies are better at building wealth than autocrac
Dumb, scammy, or deluded. (Score:3)
A lower valuation for a worthwhile product means you have a higher chance of meeting and exceeding monetary expectations which means being able to pay back loans. Either these "unicorn founders" are stupid, recognize they are selling bluster, or have deluded themselves.
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The pump and dump methodology of US startup culture that is promoting nothing but short term gains. There's no foresight into the future. There's no more family business - it's just get big enough to have market share and then get bought out. Lots of big pay days for the founders and some early investors sometimes. Lots of big losers in terms of the workers getting paid less and less due to inflation while the short term owners get huge profits.
It's all a game to make your business look valuable despite it
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There's nothing particularly unprecedented, or necessarily bad, about the current tech startup world. It's in the gold-, land-, whatever- rush phase. Every period of rapid change involves lots of hopefuls racing in, most of whom will end up broke or worse. Everything new is high risk, and it's called high risk for a reason.
People throwing money at probably stupid stuff in order to get there first is what the "rush" part is about. Who would have thought a chat app written in a weekend would bring in billions
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Not every startup needs to be enormous either. There are lots of little ones doing great things. The ones that hit the news are big, of course, and they're overwhelmingly in web stuff or apps because you can accumulate a hundred million users for your app a lot easier than getting a hundred million customers for your gadget. They also seem to be mostly ad-based, or aspire to be ad-based, because it's easier to get a hundred million people to use your app if you give it to them for free.
Completly understandable (Score:2)
If you've gone through all the brochures and endured several visits with yacht brokers, it can be hard to accept that you're going to have to settle for something less. And, let's not forget, usually the deposit is non-refundable.
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Yes, it's understandable. And it's also understandable that the VC companies are becoming more wary. This is no longer the wild west of land grabs on the internet. Startups have to be more creative, and find smaller niches where there are still needs. The odds of making it big are smaller.
Self-serving (Score:2)
Son has a strong interest in putting about the idea that start-ups are about to be valued, in their next funding round, far less highly than they were in past funding rounds. This will make it look less bad for him when the companies his fund invested in, with very high valuations, now turn out to have much lower valuations. He's setting up to blame company founders for the upcoming venture capital downturn and not his own over-ambitious investment decisions.
Can we finally can the nonsense phrasing? (Score:2)
I mean, when unicorns turn bad [youtube.com]...
But in all seriousness, can we finally drop the insanely ridiculous and childish language? Why the hell do you expect anyone to take you serious? Unicorns are NOT what I'd think of when I think about finance or successful businesses. The first association is My Little Pony. And what people associate with that is even more ... disturbing [youtube.com].
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Unicorns are NOT what I'd think of when I think about finance or successful businesses. The first association is My Little Pony.
That's on you then, it's always been a term to mean rare and special. If you referred to a woman as a unicorn for instance, it was a very good thing, same with business - although the bar of a billion dollar business isn't that special any more so now there are more and more startups that can join the club and those who want to be special are trying to coin phrases for higher level versions to define a new elite group of highest end startups.
He should take is own advice... (Score:4, Insightful)
Son certainly did well with Alibaba; but he shows no signs of being able to make the lightning strike on request.
Tech founders think capitalism doesn't apply (Score:2)
Your company is worth what somebody (Score:2)