These 44 founders have lost half their wealth and are nearly $100 billion less than a year ago. Twelve are no longer billionaires.
Through Matt Durot
LLast January, credit card startup Brex raised $300 million from a series of high-profile investors, nearly doubling the company’s valuation to $12.3 billion and making its Brazilian co-founders – Pedro Franceschi, 26, and Henrique Dubugras, 27 – the youngest self-made billionaires in the world.
“I think it’s easy for people to think we’re already successful,” Dubugras said. Forbes at the time. “We are and we are not. We’re obviously happy with what we’ve achieved, but there’s so much more to come.
It is certainly far too early to write off the long-term success that the Brex could be. But a year later, Forbes estimates that the company’s value has fallen to $6.4 billion, nearly 50% lower than 12 months ago. Francheshi and Dubugras, meanwhile, are no longer billionaires – worth an estimated $900 million each, down from $1.5 billion previously.
The biggest losers
The fortunes of these unicorn founders have fallen the most since March.
Sources: Unicorn ratings based on pricing data provided by ApeVue, Caplight Technologies and Notice, as well as Forbes reports.
They are in good company. In March 2022, near the peak of the startup funding frenzy, 44 unicorn founders — private companies valued at more than $1 billion — were worth a combined $190 billion, according to Forbes’ estimates. A year later, as crypto plummets and private markets follow the path of their public counterparts, Forbes– in consultation with prominent VCs, investors and data providers – reassessed the global unicorns backed by billionaires. The results are startling: Half the wealth of the billionaires behind the unicorns has been wiped out, leaving this elite group of startup visionaries $96 billion less than a year ago. Twelve of them are no longer billionaires. And that excludes a dozen Chinese unicorn founders who face their own set of issues (political and otherwise).
“It was a different time in the world, where I might be worth X on paper, but it was kind of fun money,” Matt Murphy, a partner at venture capital firm Menlo Ventures, tells about the preparation of the bubble. peak. “I think it’s going to take some detox, because in the world of risk, people have gotten so intoxicated by it, and everybody has to quit the evaluation drug. It’s gone, it’s over and it won’t come back, so let’s get back to things that are historically more reasonable and refocus on building great companies in a more operationally efficient way.
Some unicorns have already cut their own valuations. Online payments startup Checkout.com proactively reduced its in-house brand to $11 billion in December, after investors valued the company at $40 billion in January 2022. That reversed its fortunes. Swiss founder and CEO Guillaume Pousaz, briefly Europe’s richest tech entrepreneur, for $7.2 billion of $23 billion.
More billionaires
Billionaires in March, these ten entrepreneurs have since gone under the cut.
Sources: Unicorn ratings based on pricing data provided by ApeVue, Caplight Technologies and Notice, as well as Forbes reports.
Irish payments giant Stripe, founded and run by brothers Patrick and John Collison, followed suit, slashing its internal valuation at least three times to $63 billion this month after investors rated the company. at $95 billion in March 2021. The brothers are now worth $6.9 billion each, up from $9.5 billion previously. Apoorva Mehta’s Instacart and Ali Ghodsi’s software startup Databricks also stood out in October.
Swedish buy-it-now, pay-later startup Klarna, co-founded by former billionaires Victor Jacobsson and Sebastian Siemiatkowski (worth an estimated $600 and $500 million, respectively – up from $4 billion and $3.2 billion ), was the only unicorn with founders on Forbes’ list of billionaires to already raise a new round at a lower valuation – a so-called “downside round” – which revalued the company to $6.7 billion in July 2022, after raising at an astonishing valuation of 45 .6 billion nine months earlier.
But these half-dozen companies were exceptions. “Everyone is hiding behind the two to three years of trail they’ve had from the money they’ve raised and avoiding those down-and-out rounds,” says Murphy of Menlo Ventures. “It’s been a year now, and if you’re a [venture-backed] business, you don’t want to end up with less than a year or less than six months of cash. So we think the market should pick up later this year. »
Murphy says the layoffs are a way for companies to “adjust their size to make their money last even longer.” Among the unicorns that have downsized are ScaleAI from Alexandr Wang, 26, cryptocurrency exchange Gemini from Cameron and Tyler Winklevoss, as well as Brex, Klarna and Stripe.
Complete list
Forbes has reassessed the fortunes of these 44 unicorn founders.
Sources: Unicorn ratings based on pricing data provided by ApeVue, Caplight Technologies and Notice, as well as Forbes reports.
so far, Forbes valued venture-backed companies by taking the valuation of their last funding round, regardless of when, and typically discounting it by 10% due to a lack of liquidity and financial transparency. New Forbes The methodology further aligns the valuations of venture-backed companies with the recent turmoil in public markets and the internal and external markdowns these unicorns are facing.
If a company has raised funds in the last three months, like Michael Rubin’s online retailer Fanatics or Palmer Luckey’s advocacy startup Anduril, Forbes used its most recent assessment of this funding round. In the absence of recent funding rounds or internal markdowns, Forbes worked with three private market pricing data providers – ApeVue, Caplight Technologies and Notice – to reprice 30 unicorns that make up the bulk of the fortunes of billionaires (and former billionaires). In most of the cases, Forbes averaged the data providers’ current valuation estimates for each unicorn, which are based on the performance of comparable public companies, secondary market activity and published mutual fund brands. Based on this analysis, Forbes estimates there are now 32 unicorn billionaires outside of China, up from 44 in March, who are worth a combined $94 billion.
Not everyone agrees with our new approach. When we say that Forbes dropped the valuation of British fintech Revolut to $13.8 billion (from $33 billion) and the fortune of its co-founders Nik Storonsky and Vlad Yatsenko to $3.3 billion (from $7.1 billion) and $500 million (down from $1.1 billion), a spokesperson pushed back. “We do not engage in speculation on our valuation. Since our last funding round, in which we were valued at $33 billion, Revolut’s profitable business has continued to perform strongly in all markets around the world. »
Of course, the value of a unicorn has real consequences for these companies far beyond the fortunes of their creators. “Whether or not the founder is a billionaire is probably not the most important thing for them anymore, unless they are massively exploited against their [previously] high valuation,” says venture capitalist Eric Paley of Founder Collective. “There’s ego involved in all of this, but the bigger issue is displacement and a crisis of confidence. In a way, it’s psychological, because I think you would have been better off going from a $1 billion valuation to a $5 billion valuation, than going from $1 billion to $10 billion of dollars and then back to $5 billion.
“Now all of your employees’ options are underwater and they can decide to go somewhere else that they think is up and not down,” adds Paley. “Also, investors can think of it as ‘who would want to be an investor in this company?’ All of these people are struggling with what the business was and they’re tied to that in their minds.
Note: This story was updated as of 12:00 p.m. EST January 27, 2023 to distinguish internal ratings of Checkout.com and Stripe from ratings assigned to them by external investors.
IMAGE CREDITS
THE BIGGEST LOSERS
Sam Bankman Fried: ANTHONY BEHAR SIPA/USA NEWSCOM. Guillaume Pousaz: HORACIO VILLALOBOS/CORBIS/GETTY IMAGES. Nik Storonsky: HARRY MURPHY/SPORTSFILE FOR WEB SUMMIT/GETTY IMAGES. Barry Silver: JOE BUGLEWICZ/BLOOMBERG. Cameron Winklevoss: MICHAEL PRINCE FOR FORBES. Tyler Winklevos: MICHAEL PRINCE FOR FORBES. Cliff Obrecht: CAN GO. Melanie Perkins: DAVID FITZGERALD/SPORTFILE FOR WEB SUMMIT/GETTY IMAGES.
MORE BILLIONAIRES
Alexander Wang: CHRISTIE HEMM KLOK FOR FORBES. Henrique Dubugras: KELLY SULLIVAN/TECHCRUNCH/GETTYIMAGES. Pedro Franceschi: BREX. Prasanna Sankar: RIPPLE. Alex Atallah: SASHA MASLOW FOR FORBES. Devin Finzer: SASHA MASLOW FOR FORBES. Sebastien Siemiatkowski: KLARNA. Barry Silver: JOE BUGLEWICZ/BLOOMBERG. Sam Bankman Fried: TOM WILLIAMS/CQ-ROLL CALL, INC/GETTY IMAGES.
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