Salesforce billionaire and angel investor Marc Benioff says unicorn startups are a 'huge mistake'
So he told attendees on Tuesday at the Fortune Global Forum conference taking place in San Francisco.
"Marissa and I are part of a dinner group. And every month we have dinner with a dozen entrepreneurs," he says.
"And if you ask me why I would take time to do that, it's because I love it. I love spending time with entrepreneurs. I love mentoring. I love listening. I love advising. I love investing. I love everything associated with entrepreneurship," he says.
The group "started with a bunch of people I did not know," he said, and today they are "all billion-dollar companies. You can just go down this list of every great company in San Francisco, they've all passed through this dinner group."
But he tells these CEOs that "they are making a huge mistake. They are waiting too long to go public."
He wants to see them use Fitbit as an example. It's one of the companies that Benioff invested in. It had a successful IPO earlier this year.
"Public markets are great for CEOs," he says. "You have to answer to the public market. You have to listen. You have to pay attention," he explained.
But he says the so-called unicorns are "staying private too long. They are raising too much money."
And that could trap them.
"They are being drawn in by these venture capitalists and private equity to take these huge amounts of money at these huge valuations. They cash out early, they buy these penthouses in the sky and then all of a sudden they're trapped. They can't go public because their last valuation would be higher than their public valuation," he says.
"You do not want to get to that point. Yet they are all getting to that point. Will that eventually get rationalized? I don't know. This part of the business is unprecedented," he says.