Investors are handing tech startups a reality check. Initial public offerings have dried up, the boom in blank-cheque companies has imploded and venture capitalists are holding back their investments. That raises a pressing question: how are the founders of startups valued at $1 billion or more, otherwise known as unicorns, going to fund their businesses and cash out?
Over the past decade, the tech sector kept pumping out unicorns at pace. Around 2,300 privately held startups were valued at $1 billion or more globally, according to. Yet only 34% of them managed to go public by IPO or by merging with blank-cheque companies.
Ample private capital partly explains why. Hedge fund and sovereign wealth fund money kept cash-burning companies away from facing the scrutiny of public markets. Yet these sorts of funding for high-flying startups are drying up.
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