If things take a turn for the worse, and funding becomes hard to come by, which unicorns will have the hardest time getting to profitability?
Quora. I'm surprised YC even took them in. It has an overwhelmingly unmonetizeable userbase (primarily in India). It's growing and growing but there's nothing really that can justify the $900mm+ valuation if there's nothing to monetize. I also personally hate their pesky model that_forces_ you to sign in to view more than a single answer. Maybe Yahoo will buy them and quietly kill them at a lower valuation in a few years.
I've used Eat Club and actually think they are the best of the group. The startups that are focused on business/corporate catering will most likely fare better than individual focused startups.
That said, I don't believe we are necessarily in a bubble. Investment decisions made today are much much more fundamentally sound than they were perhaps in 2000. In my experience, markets work up and down in cycles. If you are a good company, you will survive any market condition. This does not necessarily mean you need to be profitable during that period. Investors are just more cautious in these periods and want to know that you have a PATH to profitability; you don't need to have it today. Note that while valuations are dependent in a way to how public comparable companies are trading, that specific point is only one of many inputs in thinking about how to make an investment. Investors look at many more things than just that.
With the exception of extremely few unicorns, most of the valuation practice undertaken today by VCs and angels reflects three good things:
1. Investing in a great team and product vision: Most of the unicorns didn't become an overnight success. It took time, years. The investors did not reward them with their unicorn valuation in their first year as a company. However, the team and the product proved they can get traction, they can get customers, they address a need in the market. This is what attracted investors, and the startup's ability to beat its competition / creation of a new market is why they are being granted this unicorn valuation.
2. Market Opportunity: A common theme with the unicorns is that they are genuinely targeting very large markets. In some cases, they are even expanding the addressable market. Most of these companies are first of their kind in either establishing a unique product experience/service or business model or both. Valuations of these companies reflects not only their current growth but the potential they can achieve if they can get to be pseudo-monopoly in the future.
3. Supply and demand: While not every investment VCs make is a home run, the approach they have to investments is something akin to a baseball player's batting average. This means that when a hot startup or category comes along, VCs tend to double down. This creates competition amongst them and can lead to higher valuations for the startup. Even so, the valuations usually have root in either the startup's product, team, market opportunity and/or business model. Not everything is evident to us from the outside until later (case in point being Snapchat).
At the end of the day, the investors are not gunning to give the unicorn valuations. A wise founder also does not want a run-up valuation; it increases their risk of having a down round if they don't deliver on oversized expectations.