A Fateful Year for Unicorns
THERE is one more bubble that can potentially burst in 2020: the unicorn bubble. This is a very large bubble, as unicorns are internet-based startups with valuations of over one billion US dollars.
The problem starts with the unicorns’ progressive business model. The valuation of a unicorn is not based on its profits since most unicorns are still “burning money”, suffering heavy losses from the super generous discounts, cashbacks and exhorbitant promotion budget to draw as many users as possible.
The size of this userbase has convinced investors to put in billions of dollars. Investors at the initial stag...