May 27, 2015 · 2 minutes

It seems that the grazing in the magical rainbow pastures of Unicorn Valley is a bit too good these days. So good in fact, that none of the private companies with $1 billion valuations seems to want to leave anytime soon.

And why would they with ample amounts of cash being thrown at companies doing "private IPOs"? The rich (private equity, mutual funds, and VCs with extra-large funds) are getting richer and private businesses don't have to put themselves at the mercy of the scary public markets. But what's also not happening is that companies who have built up to that $1 billion valuation aren't exiting through mergers and acquisitions either.

Some recent data from CB Insights confirms what has been widely known if you just checked your daily Dan Primack mailer: to say that there haven't been too many unicorn exits this year would be an understatement. Meanwhile, IPO activity for unicorns has been stagnant with only Box, Etsy, and, Shopify standing out among VC-backed tech IPOs -- and all are only doing marginally well.

According to CB Insights, the only company valued at $1 billion that had an exit through M&A activity in the first 6 months of 2015 was — not included in the data was EMC's announced $1.2 billion acquisition of the Virtustream today. By comparison, over the same period in 2014, there were 6 companies acquired for more than a billion dollars, including WhatsApp.

The biggest problem with the lack of IPO and M&A activity is that VC funds aren't getting any returns, especially ones making big, often late bets on companies that have already hit the billion dollar valuation mark, like most recently Docusign and Zenefits.

As Josh Kopelman* of First Round Capital pointed out in April, the lack of companies going private or having exits has led to valuations that aren't being tested by public markets.

“If there is one thing we can learn from the public IPO market, it’s that our industry isn’t always very good at pricing large companies,” Kopelman said in his epic Twitter rant on the subject.

And he's right. At some point, a few companies are going to have to lead this next generation of potentially big tech companies. And while many companies expected to have already hit the public market and are holding out for better market conditions — such as Veracode, which supposedly secretly filed its paperwork all the way back at the start of March —  it makes for an unlikely unicorn that's sharpening its horn for an IPO.

In a chat with Re/Code's Kara Swisher and Walt Mossberg tonight at their Code Conference, Snapchat's Evan Spiegel told the new Vox-ers, “We need to IPO, we have a plan to do that.”

So while a Snapchat IPO isn't necessarily going to happen any time soon, the clarion call from a tech founder who seems to be getting more public respect as a chief executive each day could be a boost for some companies sitting on the edge of the pool scared to dive into the IPO waters.

I mean, none of the 90-something other unicorns wouldn't want to get beat to the IPO game by a 24-year-old running a company founded just three years ago, right?

[illustration by Brad Jonas]

  • Disclosure: Josh Kopelman is an investor in Pando