The cloud has come back down to earth for tech startup Cloudera, the value of which plummeted to US$1.9 billion at its initial public offering last week. When Intel bought shares in the company three years ago it was valued at US$4.1 billion.
The trend of tech companies going public well below their valuations as private companies has become more common of late, and it will probably continue. Shira Ovide writes for Bloomberg this week that, while the scale of Cloudera’s drop was new, don’t expect it to be the last time this happens.
The startup funding bubble of 2014 and 2015 propped up valuations at unsustainable levels that in many cases have yet to be reconciled. As Ovide writes, “this is a new kind of failure, and Silicon Valley hasn’t come to grips with it yet.”