🎃 As Halloween approaches, I want to talk about zombies. Zombie companies, that is.
🧟 The eerie truth is that many "Zombiecorns" — private companies that haven’t raised a primary round since the ZIRP era — are being left out in the cold by the secondary market.
Market context: equity markets are strongly up since the interest rate-fueled correction that started in 2022.
📈 Since December 2022, the Nasdaq is up 75%.
📊 Since December 2022, a basket of 20 pre-IPO Unicorns @Caplight tracks is up 30%+.
And yet, dozens (hundreds?) of “Unicorn” valuations seem stuck at deep discounts to pre-2022 levels.
Take a look at some notable valuation drops we've seen in our secondary market data vs. the companies’ last funding round:
- Starburst (data integration): -88%
- Lookout (cybersecurity): -82%
- Impossible (plant-based food): -82%
- SambaNova (AI infrastructure): -76%
- Patreon (creator platform): -75%
- Airtable (workplace productivity): -73%
- Calm (meditation app): -66%
- Chime (fintech): -65%
- Chainalysis (blockchain analytics): -64%
- Notion (productivity tool): -59%
What do these companies have in common?
Well, for one these companies have not raised a priced equity round since 2022 (from what I can tell).
Without a recent priced round, potential secondary market investors seem uninterested in establishing a new price, leading to sell interest drifting lower-and-lower, and decreased trading volume.
The anti-pattern: Chime.
Despite not having a priced round since 2022, we’ve seen secondary activity in Chime surpass ZIRP-era volumes.
Why? The company hinted at an IPO in 2025 with Morgan Stanley lead-left (link below).
How to exit Zombiecorn status? Raise a round or go public, it seems.
Shoutout Anthony Mirhaydari, CFA for the first use of this term that I could find.
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