The Intelligence from The Economist The Intelligence: Horn under a bad sign
Feb 27, 2024
Charlize Chitness, a business correspondent for The Economist, shares insights on the decline of tech unicorns, revealing how rising interest rates and market challenges have endangered these startups. Kinley Salmon, Africa correspondent, addresses the dire housing crisis in sub-Saharan Africa, highlighting stories of individuals struggling amidst rapid urbanization. The discussion also touches on the controversial return of the far-right social media platform Parler, exploring its tumultuous journey and evolving identity in today's polarized landscape.
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Unicorn Decline
- Tech unicorns, once abundant due to low interest rates and high valuations, are now declining.
- Funding has decreased, and investors struggle to recoup returns, marking the end of the unicorn era.
Impact of Rising Interest Rates
- Rising interest rates have ended the era of cheap money, impacting tech unicorns reliant on high cash burn.
- Crossover investors, once significant in startup funding, have withdrawn, leaving unicorns with limited exit options.
Limited Exit Strategies
- IPOs and acquisitions, typical exit strategies for investors, are less viable due to market conditions and regulatory scrutiny.
- The secondary market for unicorn investments offers lower valuations than previous fundraising rounds.