The current hype about two-sided digital platforms, blitzscaling and winner-takes-most markets has fuelled a surge in IPO listings. It is perhaps unsurprising that this exuberance, especially when combined with inordinate liquidity, record levels of VC activity and multiple fundraising rounds, has often produced stratospheric valuations that are difficult to reconcile with free-cash-flow (FCF) fundamentals.

As discussed in this paper from Epoch Investment Partners, penned by CEO and co-CIO Bill Priest and Managing Director of Global Portfolio Management Kevin Hebner, a growing number of commentators suggest we are repeating the excesses of the dot-com boom – are the unequivocal bears right?

One consequence of the high valuations is that there are now over 360 unicorns* globally, with most in tech-related sectors. Given the soaring number of IPOs, it would seem reasonable to expect this list to be shrinking. However, just the opposite is occurring as the pace of business model innovation is intensifying, ensuring an escalating number of promising start-ups. To illustrate, last year delivered a sizeable herd of new unicorns, 96 according to PitchBook, with 2019 on pace to surpass that number and set a new record.

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Tracey Franks GSFM Adviser

The views expressed are her own and do not consider the circumstances of any investor.