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Many startups are worth much less than they claim: study

Once upon a time, unicorns (companies valued at more than $1 billion) were thought to be rare, but by early 2017, there were more than 200 worldwide, with 113 based in the U.S. Now research by Will Gornall of UBC’s Sauder School of Business and Ilya A. Strebulaev of Stanford University has found that out of a sample of 116 of these companies, 53 are actually worth less than $1 billion and 11 are overvalued by more than 100 per cent. Gornall and Strebulaev also discovered that the average highly valued venture capital-backed company reports a valuation 49 per cent above its fair value, with common shares overvalued by 59 per cent.