Why Unicorns Are A Turn-Off For Our Crowd

A portfolio of small companies is a safer bet than one big investment

We've always found crowdfunding's fascination with unicorns (billion dollar valuations) a little tiresome.investors are foolish to put too many eggs in one basket. So we're very happy to read an article called "It’s not all about the Unicorns."

Matthew Cushen describes himself as an 'Innovation Consultant and Entrepreneur." He's co-founder of Worth Capital, a London-based firm specialising in startup equity.  Writing in London Loves Business, he manages to write about mattresses, manufacturing, movie-making (plus several other sectors from elsewhere in the alphabet) in a relatively short article.

Some might call his analysis 'contrarian', but what we like is his willingness to look for value (and find it) in businesses that are unfashionable:

"At Worth Capital, [we] look to find well-architected solutions which search for a problem to solve. Whether they are technology based or not is irrelevant. As we want to ensure that the business idea has a solid base of consumer insight, and clearly identifies a consumer pain to be solved, or something for them to gain.

"Beyond tech, there are also a wealth of investment opportunities. And an investor is more likely to get a good valuation upon which to buy into the business. From food and drink brands which end up on supermarket shelves, to new dining experiences or the movies we watch, there are plenty of sectors to get excited about, even if the products themselves aren’t that exciting."

This is music to our ears. Partly this is because we want the UK to develop a culture of investment that is more broad-based inclusive, where the investors and the business that receive investment reflect the whole of our culture, work and society. But it's also because we would rather invest in a portfolio of twenty, thirty or forty decent-sized sustainable British companies, than stake our pension pot on one or two of the mythical 'unicorns'.

FTAlphaville just did a smart analysis of FundingCircle's accounts, and their reporter Kadhim Shubber found £38million of 'other expenses'. What does the celebrated unicorn mean by that, exactly?   "That remains a mystery," says Shubber. "The company wouldn’t tell us what falls under that line, except to say 'it includes lots of things'".

In another of today's breaking news stories, we hear that Seedrs has just raised a fresh round of capital to fund its expansion. With a valuation of £50million, it would take twenty companies the size of Seedrs to equal the size of one unicorn. We know which we'd rather have in our portfolio.