by Brenon Daly
With a reported unicorn-sized exit, Dollar Shave Club has been able to pull off what few other high-profile e-commerce startups have done recently: actually deliver a return to its investors. The e-tailer, which raised more than $150m since its founding four years ago, sold to consumer products giant Unilever for $1bn, according to numerous press reports. Assuming that 10-digit price tag is correct, Dollar Shave Club investors stand to pocket a tidy return.
The same can’t be said for the backers of two other websites that frequently found themselves in the headlines for ‘disrupting’ the staid retail industry, but came up short when they sold earlier this year to the very brick-and-mortar companies they set about disrupting. Both Gilt Groupe (acquired by Hudsons Bay Company in January) and One Kings Lane (acquired by Bed Bath & Beyond in June) sold for less than the money they raised from VCs. Investors lavished about a quarter-billion dollars on both Gilt Group and One Kings Lane, or some $100m more than Dollar Shave Club took in.
The distressed sales of Gilt Group and One Kings Lane initially confirmed that some of the air appeared to be leaking out of the valuation bubble for many of Silicon Valley’s highest-valued startups. That shouldn’t come as a surprise. After all, a majority of the respondents to the M&A Leaders’ Survey from 451 Research and Morrison & Foerster forecast last October that the unicorns that would exit in the coming year would do so at a lower valuation than they had commanded in their latest VC fundings.