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The downfall is compounded by two additional factors: What exactly are these companies running from?In general, the valuation frameworks that exist for a set of comparables are there for historical reasons, based on economic attractiveness.
The first was Zenefits, a commercial insurance broker with a compelling and novel business model.
I am most worried about the wave of “me, too” players that came next, Alt Lending 2.0.
Most of them built their business plans on the now shifting sands of temporarily high valuations and cheap capital, and have insufficient differentiation to carve out a durable niche.
From podiums at conferences and in investor materials, they proclaimed that they were “technology companies,” “Internet companies,” “marketplaces” and “platforms.” They did this in the cynical hope of getting a higher valuation at every turn.
What we’ve learned is that the consequences of this are far worse than the inevitable collapse of valuation metrics back to traditional frameworks.it wasn’t simply a bribe or a spiff to induce clients to use the brokerage services.