This just absolutely makes no sense at the first place. Why
would some biggies and top notch companies that raised $50 million or $100
million do layoffs? Where did the money go? Did they spend it all already? Is
it in banks? What can be the possible reasons?
Of course, this not applied to all the unicorns in the
market. Some are doing really well and generating constant if not higher level
of revenue.
So, what is happening in the current scenario is that
considering the financial market set up now, if you raised a high evaluation
once, the chances of generating the similar revenue in the second round are
very stunted. Marker evaluation have drastically reduced by 75%. As a result,
you can’t count on your second round any more. May be by hook or crook you get
the result similar to your first round, but you can not count on it any more.
It is no longer reliable. Agreed that majority of your income is still in banks
and not spent already, but eliminate your assumption of generating higher
values over the years.
This is what is leading to layoffs. Investors are trying to
stretch the capital, but even for the best of the unicorns, no new value
addition is seen.
To set your goal right and to be in the race for long, it is
important to make your money last. Just having the money is not enough. That won’t
suffice the market needs.
