TLDR:
- The number of unicorn companies, privately-backed companies with billion-dollar valuations, has surged over the past decade, making the term less remarkable than before.
- Investors’ fear of missing out on the next big company and the potential for significant returns are driving up outsized late-stage deals.
- The total market value captured by unicorns has soared from $235 billion to $4.5 trillion.
- The US is home to most unicorns, but China and India have experienced the fastest growth.
- Unicorn companies in the AI space are popular, with 44% of new unicorns being dedicated to AI and machine learning.
- Unicorns are staying private for longer, with an average life span of 10.7 years.
- When unicorns decide to go public, they may do so at lower-than-expected valuations.
Unicorn companies, privately-backed companies valued at over a billion dollars, were once rare and remarkable creatures. However, the number of unicorns has surged over the past decade, causing the term to lose some of its impact. According to a report from Morningstar Unicorn Market Monitor, the number of unicorn companies has grown from 87 to 1,381 in the past 10 years. This increase is attributed to investors’ fear of missing out on the next big company that could bring significant returns. The total market value captured by unicorns has also soared from $235 billion to $4.5 trillion.
The US remains home to most unicorns, but China and India have experienced the fastest growth since 2020, with a 63% and 200% increase, respectively. In terms of industry focus, AI and machine learning are popular among unicorn companies, with 44% of new unicorns in 2023 dedicated to these fields. Examples include OpenAI, reportedly worth $80 billion, and Anthropic, valued at more than $18 billion.
Unicorn companies are staying private for longer, with their average life span to exit increasing from 6.9 years to 10.7 years. This indicates that private companies have ample access to capital to sustain their growth. However, when unicorns do decide to go public, they may end up going public at lower-than-expected valuations. Factors such as growth projections and a founder’s ego can influence the value of a startup.
