Just as in “Game of Thrones,” winter is coming, and with it come huge risks to investors and employees of the so-called unicorns.

Unicorns are broadly defined as startups worth US$1 billion or more. Once rare and mythical, there are now more than 100 unicorns, according to some estimates.

However, once these firms are faced with competitive pressure from public markets, their value goes down and creates some major disappointments.

(Related: Software startup market has shrunk by half since 2009)

We are now reaching a turning point, which will hurt many investors. Only some will survive, and a “back to basics” era needs to occur. High valuations are only sustainable to those with reasonable business models.

Valuations going down
The market is beginning to be more transparent, and that means valuations are going down. In the last few months, valuation levels for some unicorns have decreased from 10% to 50%. For instance, Blackrock, Fidelity and other institutional investors have recently declared in public filings that their estimated values of companies such as Dropbox and Snapchat have dropped by more than 25%.

Many unicorns that went public now have their stock prices well below what they were at the IPO stage, and below previous rounds of funding. As an example, a share in Square, a payments company, was priced at $9 at its IPO, below the expected range of $11 to $13 and well below the $15 that some private investors paid for it in late 2014. At the IPO price, Square was valued at close to $3 billion, which is 50% below the $6 billion valuation for which it had raised money from private investors a year before.

It is important to realize that many of the so-called unicorn valuations above $1 billion are achieved through implied valuations based on smaller stakes being actually traded in the private market. In addition, these private transactions have very different types of shares being issued. It is common for privately held unicorns to have five or more types of shares, with different provisions.