Will 2016 become the year of the tech unicorn?

By Madhvi Mavadiya | 15 January 2016

Business planning software, Anaplan, otherwise known as the spreadsheet killer, raised $90 million this week and officially became a tech unicorn. In the financial world, unicorns are referred to companies that are valued at over $1 billion and this is quite rare, but as fintech enters into a new stage, could this result in a boom of tech unicorns this year?

After replacing Microsoft Excel at a number of multinationals, Anaplan joins Skyscanner, the Edinburgh travel agent, at unicorn status and 17 other British unicorns, according to The Financial Times. An office part of Indian software group Wipro, Premji Invest, led the fundraising as well as Anaplan’s current investors, US funds Founders Circle Capital and Harmony Partners were involved.

This fundraising will prove beneficial for Anaplan’s operation in the EMEA region and the expansion to other countries in Asia, as managing director Laurent Lefouet explained. “We have had three to four years of hypergrowth and we are not planning to slow down. We plan to double the size of our US team and move into new geographies.”

Despite this evident growth in the tech industry, according to recent research conducted by CB Insights, the unicorn boom has slowed down. The data showed that only nine tech companies became unicorns last quarter, in comparison to the 23 companies that became unicorns in the second and third quarters last year.

Anand Sanwal, CEO of CB Insights said that there was an influx of negativity toward the end of the third quarter. “While we expected that would manifest in the funding stats, we were surprised to see the hit so quickly – in just the next quarter,” Sanwal wrote in an email, as quoted in Reuters.

Reuters explains that startups have been encouraged to stay private for longer because there is cash available and as a result, funding rounds have been more than productive with hundreds of millions raised, ensuring that valuations increased exponentially.

The Wall Street Journal’s Billion Dollar Startup Club, that tracks the venture backed private companies that are valued at $1 billion or more, believes that there are a total of 115 unicorn startups in the industry.

In 2014, when the WSJ started tracking these companies, there were 42 but within a short space of time, this number doubled. However, as CB Insights revealed, there is a tendency for investors to pursue private IPOs, private shares for companies that will be listed in the near future.

“While many of these unicorns will surely prove to be tremendously valuable, enduring companies, we believe that some of them will be exposed as nothing more than horses with sticks taped to their heads,” Josh Kopelman wrote in venture capital firm First Round Capital’s Q1 letter.

Alongside this, the FT also reported that Anaplan recruited a tech executive from US software business Genesys, James Budge, as chief financial officer, which is another in a long line of moves from the tech industry to a financial position, proving that these two sectors go hand in hand. 

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