In 2013, when Aileen Lee of Cowboy Ventures first coined the “unicorns” term describing startups valued at $1 billion or more, she named 39 companies in the U.S fitting the definition.
In the spring of 2014, when I first set to compile a list of unicorns from around the globe as part of my work at InVenture Partners, the final list consisted of 83 companies, 56 of them in the U.S.
Over the next few years, this number continued to increase at an alarming pace, with CB Insights now highlighting 186 companies, and CrunchBase Unicorn Leaderboards listing 224 unicorns and 43 exited unicorns as of February 25th, 2017.
Still, those lists, while highly interesting, don’t necessarily provide the depth of insight offered in the original article by Aileen Lee. I thought it might be interesting to revisit the topic today, and explore what unicorns from around the world have in common and what differentiates them from each other.
To do that, I set to compile a list of companies that qualify to be called “unicorns” that carries as much information as possible. This list includes all startups co-founded since 2003 for which the latest post-money valuation is either equal or over $1 billion, including those that are publicly traded or acquired.
You can see a quick snapshot of the dataset below:
The last point is especially important for the companies whose valuations are supposed to have plummeted recently (think Xiaomi, Theranos and a few others): unless there was a formal down round, or the company is publicly traded, the valuation used for the purposes of this analysis is still the one the company received in the most recent round.
The same is true for the companies that haven’t raised funding in a long time (Klarna is one example) and are supposedly worth much more today than they were during the last round of financing. While this might skew the numbers a bit, I see no way to objectively adjust these valuations, which is why I’m sticking with confirmed valuations.
With that said, let’s now jump straight to the analysis.
To date, 274 companies started in 2003 or later have reached the coveted “unicorn” status, and, perhaps even more importantly, maintained this status. The last remark is crucial, as quite a few companies that at some point of time were supposed to be worth around $1 billion or more have since long lost their place on the pedestal (Fab, Gilt Groupe or LivingSocial are just a few names that immediately come to mind).
That being said, below you can see the distribution of unicorns by the year they were founded, as well as the average valuations for each year. Unless otherwise noted, I’m using the latest confirmed valuation to calculate the averages; for publicly traded companies, that means using the latest market cap.
As you can see, the numbers remain relatively consistent across the years, although there are 4 spikes (in 2004, 2007, 2010 and 2012) in the number of unicorns being founded in any particular year. Also, while the number of unicorns seems to start declining in 2013–2015, it’s more likely that a number of high potential startups founded in 2013 or later just haven’t reached the unicorn status yet.
According to a number of estimates, the time to reach $1 billion valuation is rapidly decreasing, but still, even for very successful companies it takes 2–3 years to get there.
Another thing you might immediately notice on this chart is that 2004 was a huge outlier in terms of the average valuation. Obviously, that was driven by Facebook, which with its current market cap of about $380 billion is by far the biggest unicorn to date. Same goes for 2009, which is the year when Uber was founded.
To account for that, we might want to switch to the median valuations. As you can see below, the median valuations are much more consistent over the years, and are also much lower than the average ones, remaining below $4 billion for any particular year.
Now, if you look at the list of the startups at the beginning of the post long enough, you might notice that some of the companies there are not necessarily startups in the traditional sense of the world, but rather are spin-offs or joint ventures of established players (e.g. JD Finance or Hulu). While those companies might seek outside funding and generally operate independently from their parent companies, one might claim that they still have an “unfair advantage” over other startups and should therefore be excluded from the analysis.
Besides that, several companies on the list (namely, Supercell and Skype), while perfectly fitting in the traditional startup definition when they were founded, have since undergone a series of acquisitions, which means there were periods of time when those companies again could be viewed as subsidiaries of larger corporations.
Finally, there are several companies (e.g. Taboola, Zuora and a few others) for which the valuations of over $1 billion were widely reported, but never confirmed by the companies or their investors.
Let’s exclude all of those for a moment and look once again at the distribution of the startups by the year they were founded.
As you can see, this chart doesn’t look significantly different from the previous one, although the peaks are now slightly less pronounced, and the average valuations are slightly lower for most of the years.
Now let’s take a look at the geographic distribution of the unicorns.