Just when you thought the year 2022 couldn't get any worse, it seems that many unicorn startups are about to become zombies. At least Axios believes so, citing VCs.
Unicorn startups are the ones that are valued at over $1 billion. According to data from CB Insights, there are 1,000 unicorns around the world. Chinese tech giant Bytedance is the largest unicorn with a valuation of $140 billion as of press time.
Although the so-called zombie startups aren't going to shut down, they're not going to be worth "anything to a lot of their investors," says Justin Fishner-Wolfson, Co-Founder of 137 Ventures. According to the report, the main challenge for these companies will be maintaining morale among employees who were hired shortly after companies raised big money during the funding.
Axios admits waves of layoffs might be just around the corner if management teams based 2021 hiring on the assumption of 2022 investment rounds at higher valuations. Even though no numbers were revealed, the report notes there could be "some very tough talks" for VCs with their limited partners, the ones that form the base of cash inflow for investment firms.