Last week Salesforce founder Marc Benioff warned the tech unicorns – companies valued at over a billion dollars based on investor funding – were leaving their stock market debuts too late.
The initial public offering of payments platform Square bears Benioff’s warning out, with the company’s IPO market value being less than the company’s implied value at its last private fundraising.
What’s notable about the unicorns’ reluctance to go public and the limited nature of the stock market floats – Square is only making 8% of its equity available – is the desire from founders and key investors not to relinquish control.
For the moment that desire not to cede control is tolerated by investors but in a declining market, shareholders may not be so tolerant.
Times could be about to get tough for the unicorns as the downside of massive valuations becomes apparent.