(Swaminathan S Anklesaria Aiyar is consulting editor at The Economic Times. The article first appeared in the Times of India on August 1, 2021)
- Some investors ask, even if it is dangerous to plunge into all IPOs, is it not much safer to plunge into unicorns, since these already have massive backing from the financial powerhouses of the world like Softbank and KKR? If those massive investors are willing to wait patiently for a decade before a unicorn turns profitable, does that not protect them from the plunges seen in lesser companies unbacked by global finance? Yes, there is a greater degree of safety. But high finance is not rushing into unicorns expecting them all to become Amazons and Facebooks one day. The global financiers think big, and support ventures that have the potential to become world class even if that is speculative and will take time. The financiers expect the vast majority of these unicorns to ultimately fail. But it is nevertheless worth investing in a big way because even if just one or two out of a hundred turn out to be major successes, that will more than compensate for the collapse of most of the rest.