A key factor in the unicorn startup valuations is the prospect of the company building a near monopoly. Over the years this is what’s driven the valuation of companies like Microsoft, Google and Amazon.
This is what underpins the valuations of companies like Uber and Lyft and their potential monopoly positions have been entrenched with ride sharing service Sidecar deciding to wind up.
In the food delivery space, things are more competitive and with no clear leader which makes things even more difficult for the companies operating in this space. High profile service Instacart yesterday announced its laying off recruiting staff and increasing delivery charges as it deals with a tighter market.
Instacart and Sidecar’s woes are an indicator of what’s to come for more of the tech startups which haven’t achieved some sort of profitability.