With Uber's recent valuation- higher than 80% of all the companies in the S&P (despite its rumoured £480M per year burn rate) one has to wonder about the paper billionaire phenomenon. Curiously, in the last 4 years, the US has increased its numbers of startups with a billion dollar+ valuation to 87 companies, whilst the UK has remained steady with its sole 4 unicorns: Zoopla, Monitise, Wonga, and Powa Technologies.
There might be several reasons for this, but the primary reason is that many startups in the UK are acquired by three US giants Google, Microsoft and Facebook before they reach a billion dollar+ (currently £637M+ GBP) valuation. Take for example, Deep Mind Technologies (founded in 2011 by a UCL alum and acquired by Google in 2014 for £242M) and the Oxford-based Dark Blue Labs and Vision Factory, two more startups focusing on artificial intelligence acquired for "£tens of millions."
In the same year, Google also acquired Spider.io, Rangespan and Ireland's Thrive Audio, and Facebook acquired Lightbox.com and Monoidics for an undisclosed sum and Ascenta for approximately £12.7M. Microsoft acquired Network Managers and STNC in the 1990s; Rare for $375M US, Lionhead Studios, Sendo, iView Multimedia and Multimap.com for an undisclosed amount between 2001 and 2007.
Another reason could be cultural: being a paper billionaire might be considered overrated by UK entrepreneurs and having a startup acquired for £10-20M is perfectly acceptable. Who wants to be a billionaire anyway? Considering that many visible billionaires (whether a paper one or with liquid assets) in the public light are often targets for militant groups, being quietly acquired for less than a billion dollar valuation might be the more sane tactic to choose in order to live a happy life. From numerous kidnappings such as Freddy Heineken, Richard Oetker, Edward Lampert, Patty Hearst, John Paul Getty III to unexplained disappearances such as Michael Rockefeller, who suddenly went missing in Africa; to strange deaths, from Anni Dewani to the recent incident two weeks ago, in the death-by-treadmill "accident" of Facebook COO Sheryl Sandberg's husband Dave Goldberg while the two were on holiday, the life span of billionaires are often interrupted by higher rates of violence and crime from external sources. In fact, this Forbes article states that a billionaire in China dies every 40 days, and not by natural causes.
With China following the US paper billionaire trend, with 30 unicorns founded between 2003-2012, there is reason to be weary and nervous if one is listed on the Forbes billionaire list. This quora reply gives advice that billionaires should:
1. Never, or very rarely, doing any type of publicity.
2. Having no recent photos taken of yourself or your children.
3. Living in an isolated area or in a gated community.
4. Flying in private aircraft whenever possible.
5. Arriving and leaving from various places at different times so no one become accustomed to your schedule.
6. Living an exceptionally low-key lifestyle
Alexa Dell, daughter of Michael Dell, was advised to delete her twitter and instagram accounts for security reasons, and the Dell CEO and Co-Founder pays £1.7M per year just to safeguard his family. So there might be a sane reason why UK entrepreneurs prefer to be low-key and not accelerate its formation of unicorns. After all, the best things in life are free, but for billionaires, they must pay for it.
By Sierra Choi, Director of Marketing