From unicorns to near zero: RENT, Allbirds, Vroom, and BuzzFeed

Many companies that were once unicorns are struggling to survive as interest rates remain at an elevated level and as growth slows. Some former unicorns like WeWork, Hopin, Olive AI, and Convoy have all filed for bankruptcy.

BuzzFeed and Rent The Runway are on the verge

Manu others are fighting to survive as their valuations have tumbled and access to cash has become tough. Similarly, many venture capital firms that dished out billions of dollars in the era of low interest rates have slashed their spending. 

A report by Crunchbase estimated that global venture capital funding came in at $285 billion in 2023. While this is a big number, it was a 38% decline from a year earlier. It was also the lowest investments in five years.

BuzzFeed is one of the top unicorns that is struggling. Once valued at over a billion dollars, the company’s market cap has crashed to $65 million as its growth has slowed. Its annual revenue has retreated from a peak of $383 million in 2021 to $252 million last year. 

BuzzFeed has been forced to end some of its services such as BuzzFeed News. It has also slashed workers and sold Complex Networks for a big loss. It is also considering selling some of its top platforms like Tasty and First We Feast. 

Rent the Runway (RENT) is another former unicorn that is hanging on a thread. Its market cap peaked at over $1 billion in 2021 and has now crashed to just $26 million. This decline happened as the bubble in the luxury e-commerce burst as evidenced by the collapse of Farfetch and Matchesfashion. Yoox-Net-a-Porter is hanging on a thread.

The challenge for Rent the Runway is that while the company is growing its revenue, it is struggling to do that in a profitable way. Its total revenue in the past four years has totalled to $823 million while the cumulative loss stands at $673 million.

Allbirds and Vroom stocks have slumped

Allbirds is another unicorn that is facing substantial challenges. Its market valuation peaked at over $4 billion in 2021 and has retreated to less than $100 million. As I have written before, Allbirds has struggled to expand its product offerings. 

Allbirds revenue peaked at over $297 million in 2022 and retreated to $254 million in 2023. Its losses have continued jumping. It has moved from $14.5 million in 2019 to over $152 million last year. The most recent results showed that its revenue crashed by 14.5% to $75 million while its cash balance stood at $130 million.

Vroom stock price has crashed by more than 95% from its all-time high. Its stock has plunged to $12, giving it a market valuation of just $20 million. That decline happened as the total revenue retreated from over $3.1 billion in 2021 to just $722 million. 

Vroom’s crash shows how hard it is to sell cars online. In January, the company decided to wind down its e-commerce used vehicle operations. Carvana, the biggest company in the industry, almost collapsed in 2023 as its business slowed and its mountain of debt soared.