A year ago, they were the masters of outrageous valuations and blockbuster IPOs. Now many are proving sacrificial lambs as funding-raising and profitable growth appear a mirage
February 2021. “The market is loaded. What the heck are you doing,” a cofounder of a high-profile internet startup chided his Chief Financial Officer (CFO) early last year. The venture, which boasted marquee backers, happened to be one of the top beneficiaries of the pandemic tailwind, and was billed as a ‘soonicorn’—a startup with a potential to touch a $1 billion. “We raised money just a few months back,” replied the baffled CFO. “And we have enough fuel.”
The cofounder was not convinced. “I hope you are smart enough to understand that CFOs need to work closely with the founders,” he said. “Your predecessor perhaps didn’t realise that.” The CFO got the not-so-subtle message. A few months later, a new round of funding takes the startup into the unicorn club, with a valuation comfortably over the $1 billion threshold. Another two months later, the CFO gets a call from one of the board members. “Go out in the market. Raise anew round at double the valuation,” was the diktat. “Are you serious,” exclaimed the CFO. “I mean it’s just two months since the last round!”