Flipboard Inc. debuted in 2010 with the kind of fanfare any startup would envy. The news-reading app piggybacked perfectly on the debut of Apple’s iPad tablet and Steve Jobs’s promise of a new era for digital media. Critics loved Flipboard’s magazine-like layout, created by one of the first software designers of the iPhone, and investors poured money into the company.
Other companies facing similar questions about whether they can make good on early investor expectations — and lofty private-market valuations — include online storage service Dropbox Inc., note-taking company Evernote Corp., music-streaming service Deezer SA and blood-testing company Theranos Inc., said Anand Sanwal, chief executive officer of CB Insights, a firm that tracks startup investing. The companies face a challenge in that they could be too expensive for another company to buy, yet may not have the business fundamentals to justify their valuations to public investors through an initial public offering, he said.