Investors are dumping cash into ‘minotaurs’ to corner competitive markets
Investors love using mythical creatures to categorize a company’s financial status. Why? Well, because a unicorn is rare… or rather, was.
A company valued at $1B isn’t that unheard of anymore, so now, a new mythical creature has emerged — a company that has actually raised over $1B, to use Axios’ coinage, is a “minotaur.”
But, is making a minotaur a positive move for markets?
The rise of ‘blitzscaling’
Now, more than ever, investors are shoveling insane amounts of tickle cash into budding companies in high-potential markets with little competition — so no one else ever has a prayer of catching up — AKA “blitzscaling.”
It’s like playing Monopoly on crack — as of 2019, there are currently 56 minotaurs (most recently DoorDash), up from 24 in 2018, and just 9 in 2016.
Monopolizing new markets at the speed of cash
Historically, monopolies developed over time and were thought dangerous to market economies, but now they’re an investor’s holy grail — and that could be a disastrous risk.
Blitzscaling is based on the premise that if a company grows to giant status fast enough, the profits will take care of themselves — like the philosophy behind the rideshare race between Lyft and Uber; 2 companies that still remain wildly unprofitable.
Prioritizing speed over efficiency is like living in a house before you’ve built it: You overpaid to take the land off the market, but what good is the land if you don’t know how you’re going to pay for the roof?