Unicorn-holed: Softbank Coalition To Buy Uber Shares At A 30% Discount

And the hits keep coming for the unicornest unicorn in all of unicorn-land...

Back in the summer, we suggested - for numerous reasons - that Uber"s next round of financing may come at a significant discount to its current $69 billion valuation.

Overnight, headlines hit that SoftBank was said to have learned of last year"s hidden-to-the-public security breach about a month ago, and may have changed SoftBank’s evaluation of Uber’s shares, WSJ reports, citing people familiar with the matter. As a reminder, in addition to failing to notify users and the public about the information that was exposed, the company paid the hackers $100,000 to delete the data and subsequently had them sign nondisclosure agreements.

Furthermore, ReCode reports today that the city of Chicago is suing Uber for failing to disclose the 2016 breach of 57 million users’ data.

SoftBank was expected to proceed with an offer to buy billions of dollars worth of shares from Uber stakeholders as soon as this week, with a SoftBank-led investors group planning to start to buy at least 14% of Uber from existing shareholders through tender offer "at a steep discount."

Well tonight we find out just how steep that discount is...

Bloomberg reports that SoftBank and a coalition of investors will offer to buy shares in Uber at a price that would value the ride-hailing company at 30 percent less than its most recent $69 billion valuation, according to two people familiar with the matter.

 

The deal isn’t done, however. Shareholders will need to sell at the $48 billion price.

 

While it’s 30 percent less than the current valuation, the offer would represent a significant windfall for many early investors.

 

If shareholders don’t agree to sell in sufficient numbers, SoftBank could raise the price or walk away.

We suspect shareholders will be more than willing to dump their shares to monetize some of their rapidly declining investment or face being truly unicorn-holed.

China Is Threatening America's Unicorn Dominance

The United States is the undisputed capital of the unicorn - private companies worth more than $1 billion. This title though, is becoming more and more under threat, primarily from China.

You will find more statistics at Statista

As Statista"s Martin Armstrong notes, according to CB Insights, there are currently 215 unicorns in the world, of which 108 are from the U.S.

When it comes to the "birth" of new unicorns however, America"s strength is clearly being diluted.

In 2013, 75 percent of new unicorns were born in the United States, fast forward to 2017 though, and this share has fallen to just 41 percent.

The number of new unicorns from around the world has remained reasonably stable over this time, but it is the rapid increase in activity in China - from 0 percent in 2013 to 36 percent this year - that is putting the most pressure on U.S. dominance.

The United States Of Unicorns

The United States is home to 105 unicorn companies valued at $1B+.

As of 7/25/2017, CBInsights.com reports that six private US companies are worth over $10B. The two most valuable unicorns in the US are Uber ($68B) and Airbnb ($29.3B). Palantir Technologies and WeWork, both valued at $20B, are tied for third.

Of the top four highest valued, only WeWork (which is based in NYC) is headquartered outside California.

California has the highest unicorn “population” of any US state by far, with 62 billion-dollar startups inside its borders. New York ranks second with 15, followed by Massachusetts and Illinois with five each. Eight other states and the District of Columbia are also home to at least one company worth $1B+.

click image for huge legible version

Key insights about the companies in this map:

• Collectively, US unicorns are worth approximately $360B.


• Combined, these companies have raised just over $73B.


• After California, New York, Massachusetts, and Illinois, the next-highest unicorn populations are found in Utah (with four) and Florida (with three).


• The top five most well-funded US unicorns are: Uber ($15.1B raised), Airbnb ($4.4B), WeWork ($2.76), Infor ($2.63B), and Lyft ($2.46B).


• The oldest unicorn in the US is the greentech company Bloom Energy, which reached a valuation above $1B in 2009.


• The newest unicorn in the US is 3D printing startup Desktop Metal, which became a unicorn in July 2017 after raising a $115M Series D.


• The three most active investors in US-based unicorns, by total number of deals to these companies, are the VC firms Sequoia Capital, Andreessen Horowitz, and Tiger Global Management.   – CBINSIGHTS