They are called Stripe, Bytedance, SpaceX, Klarna and Epic Games.

They are payment service providers, program computer games, build rockets and have social networks - but they all have one thing in common: they are valued by billions of investors, but not yet on the stock exchange.

Such companies are called unicorns by investors.

There are currently almost 1,000 of them around the world - just half a year ago.

Franz Nestler

Editor in business.

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But they are also a mystery to the public, because we do not know exactly how they earn their money.

Most of the time, they only open their books to investors.

This is noticeably a thorn in the side of the supervisors of the American Securities and Exchange Commission - and that's why they want to monitor the unicorns more closely.

Investors and unicorns should reveal more of themselves

Specifically, the Wall Street overseers want to force the unicorns to regularly publish information about their financial position and business operations. At least that's what the "Wall Street Journal" reports, citing people familiar with the matter. But the unicorns don't stop there - investors are also to be monitored more closely. The requirements for participating in such businesses are expected to increase. To do this, they should give more information to the supervisors.

"These big companies can have a huge impact on thousands of people and are invisible to investors, employees and their unions, regulators and the public," said Democratic SEC chief Allison Lee.

"But I am not interested in imposing such reporting requirements on small and medium-sized companies."

Investors are resisting more rules

But the addressed investors and companies are not at all happy about it. "We warn the SEC against dumping additional and unnecessary burdens on private companies that could have unpredictable consequences," says Bobby Franklin, head of the National Venture Capital Association. “These companies have driven innovation and brought out new products and services that were very useful during the pandemic,” continues the stakeholder.

But why does the SEC want to put these companies on a leash?

Young start-ups are traditionally financed by venture capitalists, private equity firms and the super-rich.

However, there is so much free capital on the market that many start-ups no longer consider it necessary to finance themselves through the stock exchange or the bond markets.

The SEC therefore has no supervision over them.

When it comes to the classic IPO, they are much more concerned with ensuring that the wealthy insiders can cash in.

That is why many IPOs are later than they would have been earlier.

This is also indicated by the fact that two-thirds of the companies that went on Wall Street last year are now trading lower than they were on the first trading day.

Many investors hide under funds of funds

Currently, companies in the United States only need to register with the SEC if they have more than 2,000 shareholders. They then have to regularly submit some data to the supervisors, such as whether they have planned an IPO. However, this rule can be easily circumvented, as it is allowed for an unlimited number of people to join forces, for example in an investment fund, and then only be counted as one shareholder. A recent study by Assure Services concluded that there are an average of 63 legal entities in the venture capital funds. But even that might not be enough, because other people could hide under a legal person. Therefore, the SEC systematically underestimated the number of shareholders for years,says Tyler Gellasch of the Healthy Markets Association.

The example of Stripe - the largest American unicorn - shows how misleading such numbers can be.

Only 79 active investors are officially registered there: billionaires like Peter Thiel and Elon Musk, but also numerous such funds.

It is still unclear who this could affect

The SEC would now like to take a closer look at such vehicles.

The ultimate goal is to have large private companies as closely monitored as their publicly traded counterparts.

But the plan is still just a plan.

It is unclear which companies would be included.

If these investment vehicles were to take a closer look, however, it is very easy to quickly find more than 2000 investors.

In American politics, however, not everyone sees this as a problem.

The Republican MP Patrick McHenry is promoting, for example, making IPOs more attractive again, instead of imposing more reporting requirements on the unicorns.