Some startup "unicorns" are magical, and others are donkeys in party hats.
Illustration by Aleksandar Savic

Wheee!

By Erin Griffith
March 29, 2017

This article first appeared in Term Sheet, Fortune’s newsletter on deals and dealmakers. Sign up here.

Of all the factors that went into creating the unusual abundance of highly valued private companies we call the “Age of Unicorns,” startups avoiding the public markets is the biggest one. Instead of working toward and IPO, startups strive for a billion-dollar valuation, a mark that gives them all the same benefits of an IPO (except for a financial return). Joining the so-called unicorn club gives them external validation from customers, employees, the media, and future investors, all without the hassles of quarterly reporting. The strategy from prominent startup founders has been to avoid and delay going public for as long as possible.

Here’s Uber CEO Travis Kalanick:

“We are going to IPO as late as humanly possible. It’ll be one day before my employees and significant others come to my office with pitchforks and torches. We will IPO the day before that.”

And Palantir CEO Alex Karp:

“The minute companies go public, they are less competitive. … You need a lot of creative, wacky people that maybe Wall Street won’t understand. They might say the wrong thing all the way through an interview. You really want your people to be focused on solving the problem, not on cashing in.”

For years Facebook CEO Mark Zuckerberg was “very outspoken” about companies staying private for as long as possible. (He has since reversed that stance, saying Facebook’s IPO made the company stronger.)

It got to the point where prominent VCs like Bill Gurley, Bill Maris and Fred Wilson were openly chiding their portfolio companies to grow up and go public. Selfishly, as a reporter who is tired of relying on leaks and self-reported numbers to understand the financial performance and business models of these companies, I agree with them.

Now we’re getting what we wished for.

Bloomberg has declared that Silicon Valley startups now favor IPOs over deals. Why are IPOs suddenly cool again? Because many corporate acquirers aren’t willing to pony up enough cash to support their high valuations. In some cases, the buyers don’t want to own money-losers. (It’s one thing to take a goodwill impairment on a buyout, a VC told me, it’s another to cover your new subsidiary’s losses at the same time.)

So IPOs are especially cool for companies that can’t find a buyer. Bloomberg reports that AppNexus did a dual-track IPO/sale process; deal talks broke down over price and now it’s going public. Likewise, Okta tried to sell and the deal fell apart; now it’s going public. Same goes for three other startups – Plex Systems, MapR and Forescout.

Beyond that, Cloudera is on deck to go public. Blue Apron hired bankers to work on its offering. Pinterest is “on the path” to IPO. And according to reports, so is BuzzFeed.

The question will be whether public market investors feel the same way about high valuations and cash burn as potential acquirers do. If the investor demand for Snap stock is any indication, the answer is a resounding “no.” But in addition to being a unicorn, Snap was also a special snowflake. Other money-losing startups without the same name recognition, buzz, and cool factor may not get the same treatment.

Either way, it’s clear that our time in the enchanted forest (© Matt Levine) is winding down. The number of new companies raising capital at billion-dollar valuations has dropped significantly from the fundraising peak in 2015, and if they keep going public or selling at the same rate, the herd will shrink. Most observers don’t expect the two biggest, most valuable, most high profile, and most quintessential billion-dollar startups, Airbnb and Uber, to go public until 2018. At that point, we can declare the so-called Age of Unicorns is finally and officially over.

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