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Ten yr ago today , Cowboy Ventures ’ Aileen Leepenned acolumn for TechCrunchthat brought the term “ unicorn ” into the world .
define at the time as “ U.S.-based software ship’s company start since 2003 and value at over $ 1 billion by public or private market place investor , ” the full term has since lucubrate to encompass all private startups valued at $ 1 billion or more .
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Lee ’s editorial helped the globe categorise startups in a newfangled way , but it was also a planetary house of the times to come , as the world before long saw a monolithic speedup in the turn of billion - buck startups rout in global technology entrepreneurial hubs . In a2015 follow - up to her pillar , Lee take note that since her original column , her team found a “ jaw - dropping 115 % growth ” in the number of unicorns worth a total of “ $ 327 billion – 2.4x our last analysis , ” discounting Facebook for obvious reasons .
piddling did we know back then what lie forward . The pace at which startups reach evaluation of $ 1 billion or moreaccelerated through 2020 and 2021 , and soon after , the number of companies in the global unicorn golf club crossed the 1,000 fool . Today , Crunchbase counts1,484 unicorn that have together raised $ 906 billion and are deserving $ 5 trillion combined , while CB Insightscounts 1,220 spheric unicornsthat are together worth a sum of $ 3.83 trillion .
No matter how you count them , Lee had defined the scale of startup success that was ask to make more and more declamatory venture capital funds ’ maths work out 10 yr ago , and that brink became relatively easy to cross .
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With 5 new unicorn in first workweek of 2021 , are we in for a stampede this year ?
Then the market changed . We all know how the global speculation capital market has changed since 2021 , so there ’s no need to go over that again , but the novel landscape painting has special meaning for unicorns .
At one point , it was not uncommon to hear that a startup had structured their latest speculation round of drinks to ascertain a $ 1 billion valuation . Why would they do that ? I heard that it was easier to engage if your tech company had accomplish a big - kid evaluation . masses answer to incentives , after all , and company are made of citizenry .
It ’s gentle to forget just how chop-chop the “ unicorn ” rag became a hot trade good . In her 2015 clause , Lee save that “ from some , there ’s even business concern now that pursual of ‘ unicornhood ’ is both vexatious and may have somehow changed the nature of tech valuations . ” Again , incentives change conduct . Now that they had a fancy “ clubhouse ” to join that would in all likelihood get journalists to write about their companionship , you could see why executives vied to get hold of the ten - figure valuation soft touch .
The mart is different today . Unicornsare once again rareand late - stage capital letter isscarcer than it was a few year ago . It ’s worth digesting how cock-a-hoop this change has been : Just 12 unicorn were “ carry ” in the third quarter of 2023 , perCB Insights , the “ down quarterly level since 2016 . ”
This failure of new unicorns to form at prior rates is potentially an issue for venture capitalist . Lee ’s bill on why such companies are needed for speculation math to work are still pertinent :
Why do investor seem to care about “ billion - dollar exits ” ? Historically , top venture investment trust have driven returns from their possession in just a few company in a generate investment trust of many companies . Plus , traditional venture funds have grown in sizing , requiring tumid “ expiration ” to give birth acceptable returns . For case — to return just the initial Washington of a $ 400 million venture fund , that might entail needing to own 20 % of two different $ 1 billion party , or 20 % of a $ 2 billion society when the fellowship is gain or belong public .
A $ 400 million venture capital store ? How provincial . Currently , speculation giant a16z islooking to compile a $ 3.4 billioncollection of funds in one go , and that wo n’t even be thelargest pool of capital it has put togetherto date . Greylock justannounced a $ 1 billion fund , and Venom Foundationput together a $ 1 billion web3 - focused fundearlier in 2023 . Hell , we have n’t even mentioned SoftBank ’s two Vision Funds yet .
In forgetful , if unicorns were vital for making $ 400 - million VC funds study , the wager are far higher today render how large VC vehicles have become . Private - market investor need more unicorn exits than ever to make VC comeback attractive compared to other form of investment , specially in these eminent - interest - rate days .
The trouble here has two facets .
First , as we noted above , unicorn constitution has slow to a comparative Australian crawl , even if it remain well above the pace that Cowboy Ventures ab initio mention back in 2013 .
Second , unicorn exits remain rottenly uncommon , and such companies have historically go public at a much slower rate than they were being created for a very long time . In 2021 , startup exits soared and it appeared that the table were turning , but all that ended and now we ’re back to a massive , multi - trillion - dollar backlog .
Which run us to the two questions we desire answers to : Just how many of the current “ unicorns”are still deserving $ 1 billion ? And will they be able-bodied to ascertain a means to return cash to their backers before the heat decease of the universe ?
Today , on the 10th birthday of the unicorn moniker , we ’ve almost come full circle . From a handful of billion - buck startups to a stampede to an maturate cohort — what an insane , playfulness , and wild decade it has been .
