What is a unicorn?
A unicorn is a private-held startup company with a market capitalization of more than $1B. This term has become a familiar one in the investing community. But how did it get there and what makes these companies unicorns?
What was the origin of the term “unicorn company”?
Venture capitalists invented this term in 2013.
This term highlighted the rarity at that time of such companies. Lee searched through 60,000 funding applications for software and internet companies between 2003-2013 and found the following:
They were valued over $1 billion making them extremely rare and valuable investments.
Lee is currently a managing shareholder at
a seed-stage VC agency in Palo Alto California. Cowboy Ventures’s first investment was
Dollar Shave Club
The company saw a $1-billion exit to
2016. They provided seed money in March 2022.
Is a unicorn still rare?
Since the beginning, unicorn companies have been much more common. While unicorn status is less common today than ever before it’s possible for startups to attain unicorn status, these $1 Billion+ post-money valuations remain incredibly impressive. Unicorns are being closely watched and reported on by anyone with an interest to the most prominent players of the private markets.
Are there many unicorn companies?
At the time of this article’s publication, there were 354 global active unicorn companies. They had increased on the previous years high of 348. The number of active unicorn companies, including 139 startup startups, reached 439 by the end 2019. A total of 538 active unicorn companies were created in 2020 by 162 new companies. 2021 saw 355 new unicorn firms and ended the year at 537 companies. That’s almost the same level as last year.
A strong start to the year for unicorn companies is evident from Q1 20202. We’ve seen 75 unicorn businesses debut as of March 31st. These include standouts like
Fanatics Trading Cards
Black Unicorn Factory
. This puts the number total of active unicorn companies at 607.
That’s a whole bunch of unicorns.
Why are so many unicorn-related companies emerging?
One reason why unicorn companies are exploding is the ever-increasing confluence between the public market and the private. In the past companies relied on initial public offerings (IPOs) to raise capital necessary to scale operations. Today, companies are able raise much more private funding quickly than they did in the past, allowing them access to billion-dollar valuations.
US Unicorn Deal Activity
As of March 31, 2022
What does the average deal activity of a unicorn firm look like over time
In 2021 unicorn companies in America secured 595 deals, raking in $142.3 billion dollars. More than double the funding amount in the previous year. PitchBook began to track this data in 2006 and only five unicorn deals were concluded for $6 Million in venture capital.
By March 2022 the number of unicorn companies that have been able to benefit from 134 deals totaling $27 Billion has risen to 134. The results are comparable to those from the previous year, which could lead to similar outcomes in 2021 and 2022.
What industries are most likely to produce unicorn companies the most?
If we look at the best-performing unicorns, it is clear that there are significant overlaps and recurring industries. This not only reveals active market trends, but it may also provide insight into where future unicorns will emerge. From the
Top 10 US unicorns
60% were fintech startups. Five of those six were associated to
Blockchain or cryptocurrency
. The performance of these top fintech unicorns suggests that there is substantial interest in this area and the possibility of more unicorn businesses emerging.
More about unicorn companies
Get the latest VC trends and takeaways
Download our Q1-2022 Venture Monitor reports
Discover the steps to becoming a unicorn
See our blog entry to learn more about the challenges new businesses face in order achieve the status as breakout success for unicorns.
More information on 2022’s most famous unicorns
You can check out our blog about the top new unicorns according to post-money value
How nontraditional VC investors have an impact on unicorn activity
See our post on how nontraditional, tourist investors contributed to globalization of unicorns
More on PitchBook Data Coverage
Our data can be used to make your decision more concrete
PitchBook’s extensive private market data coverage includes actionable insights on businesses, including unicorns and investors.