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‘Unicorns’ face more difficulty attracting funds
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THOSE billion-dollar tech startups known as “unicorns,” which feasted on record capital inflows for much of last year, are facing tougher challenges for funding, a recent survey shows.
Venture-backed startups globally saw a 30 percent drop in funding in the fourth quarter to US$27.2 billion, according to the survey by KPMG and research firm CB Insights.
The number of funding rounds fell 13 percent from the previous quarter to 1,742.
Some of the exuberance has worn off after the feverish pace of funding in the first nine months of 2015, according to the report.
For the year, the report found US$128 billion in venture funding for startups, up 44 percent from 2014. The number of funding rounds was more than 7,800.
Yet the latter part of the year saw some signs of cooling, with less funding and writedowns in the value of some hot startups, the researchers noted.
Mobile payments startup Square made its stock market debut in November, raising US$243 million at a market value of US$3 billion — or roughly half the level from its latest private funding round.
Several other startups such as the social network Snapchat and benefits administrator Zenefits have seen their valuations slashed, although the biggest unicorns such as Uber and Airbnb have seen their values continue to rise.
The latest trends have fueled fears of “wounded unicorns” and lower valuations, which could spill over to publicly traded tech firms.
The report said tech startups took in some 78 percent of venture funding in the past quarter, a level consistent over the past year.
By region, North America received the largest amount in the quarter (US$14.1 billion) but the drop from the past quarter was 32 percent.
Asian startups raised US$9.7 billion in the quarter, a drop of more than 31 percent, while European startups took in US$3 billion, down 17 percent.
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