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It’s OK unicorns, you weren’t born to go public: Fmr. Apple chief evangelist

Unicorns killed the IPO market?

It's been a lackluster year for tech IPOS, with rising regulation and an inundation of venture capital money. But the lull in new stock offerings is no indication of success for young Silicon Valley companies, according to Guy Kawasaki, former Apple chief evangelist.

"The purpose of a company is to create a great product or service or to create a customer," Kawasaki told CNBC's "Squawk Alley " Monday. "Going public should be a natural outcome of success but it is not the definition of success."

So-called "unicorns" have grabbed the attention of venture capitalists but individual investors are far less involved. So far this year, 31 companies have gone public in the U.S., down from 69 in the first five months of 2015 and 115 in the same period in 2014, Barron's reported, citing Renaissance Capital.

Nick Ray | ABC | Getty Images

Terry Kawaja, LUMA Partners' founder and CEO, said it's a change in private financing that has crushed new stock offerings.

"Venture capital used to finance high beta companies at relatively early stages, now there's money available at the growth and later stages so that companies can stay private," Kawaja said, calling it a de-democratization of investment. "The public can't participate in the beta of these companies."

Kawasaki, meanwhile, quelled worries that private companies may have a harder time recruiting or retaining employees if they don't go public. He warned against temptation to flee to the more established Googles and Apples of the world.

"You're not going to have the wild upside that you had when you got into those companies in the early public period," Kawasaki said. "It's more about career opportunity where you want to work and the kind of intellectual challenge that a company provides. It's not about just doing a spreadsheet to see which company will I make the most money at."

The few technology companies that have gone public have not been that well received by the market, said M.G. Siegler, a general partner at Google Ventures who focuses on early-stage investments.

"I do think there is some reticence on going public when they do see some of their peers just getting slammed for what they might view in ways that are sort of unfair," Siegler told CNBC Monday.

IPO weakness due to unicorns?

The slowdown, though, could benefit younger companies.

"I do think these companies are using some of that money that's been in the later stage of the private side to then be able to take a little bit more time to get the business to where it needs to be," Siegler said. "These companies need to be in a good place when they do go public."

The natural alternative, he explained, is an acquisition. Siegler, who was an early investor in Medium, Slack, and Periscope, said it's always on a case-by-case basis, but regardless of the situation, companies needs to be in a sustainable place before making a move.

"The outcome we're always looking for is the biggest sort of outcome in these companies to have the most far-reaching effect on the most number of people," Siegler said.