VC Firm Stretches Bad Metaphor To Its Absurd End

Seriously, can we stop with the f*cking "Unicorns" already?

First Round Capital is a very successful venture capital firm that has gotten in early on hot startups like Square, Warby Parker and Uber. It's a big deal firm with big deal clients, and it has some thoughts on the idea of a possible tech valuation bubble.

In the first quarter of 2014, The Wall Street Journal began tracking venture-backed unicorns (i.e., private companies with valuations over $1 billion) in a story called “The Billion Dollar Startup Club.” At the time there were 42 unicorns. Just one year later, the unicorn population has more than doubled to a total 87 unicorns. Yes, it seems that a new unicorn was created every 9 days last year!

That's a lot of money being thrown around, and it's a sh*t ton of unicorns.

Especially considering that unicorns are mythological and therefore a a terrible metaphorical choice for a "rare startup that increases wildly in value." Unicorns are also a terrible choice because, insofar as they're not real things, they are difficult to use in any allegory about startups that appear to be valuable but aren't... Isn't that right, First Round Capital?

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.

See? Even "real" unicorns are just horses with f*cking sticks taped to their heads. Which makes you think, are all startup valuations just perceptions of a possible reality and not intrinsic?

Like, what if a private VC-backed startup - let's say a platform for crafters to sell their goods, like an online flea market - is valued very highly by investors and turns into a unicorn. But then it goes public and that unicorn is seen by the market as a donkey with an organic yarn horn sewn into its forehead?

See, its a terrible allegory?

We see your point First Round, but maybe let's get a new word because this one sucks so bad.

The rest of First Round's letter - which is actually very good - is below.

First Round Q1 LP Letter