Cover image
Cover image by Rajan Mithra

Coined by venture capitalist Aileen Lee in 2013, the term unicorn is used to define startups with a valuation of US$1 billion or more. Unicorns were once a rarity, a coveted status only a handful of startups could attain, but in the last three years, they’ve exploded. As of Feb 2nd, 2022, there were a thousand unicorns with a combined valuation of US$3.3 trillion, larger than the GDP (PPP basis) of the UK. 

In the first half of 2021, 248 unicorns were minted (2.32 times the number added in all of 2020), and there were more than 400 mega-rounds, defined as rounds in which more than US$100 million is raised. So, where are these unicorns located? Which industries do they belong to? Are we in the age of decacorns?

Analysis

Year-wise classification of unicorns added

If 1999 was the year of the IPO, 2021 was the year of the unicorn. On average, 43 unicorns were minted every month in 2021 or 1.4 per day. In the month of Jun 2021, the number of unicorns added peaked at 56, which is more than the number added in the first eight months of 2020. 

Location-wise classification of unicorns

The US is the natural habitat of the unicorns, home to more than 50% (511) of the world’s unicorns. China comes in at a distant second with 167 unicorns or 17% of the total, followed by India with 59 unicorns or 6% of the total. Among the top ten countries with the most number of unicorns, three positions are occupied by European countries- the UK with 39 unicorns is ranked fourth, closely followed by Germany with 25 unicorns, and France with 24 unicorns is tied for the sixth position with Israel.  

Other countries that figure in the top ten list include Canada with 17 unicorns, Brazil with 15 unicorns and Singapore with 12 unicorns.

Industry-wise classification of unicorns

With more than 200 unicorns, the fintech industry dominates the landscape. The 206 fintech unicorns have a combined valuation of US$808 billion. The top five most valuable unicorns have a combined valuation of US$245 billion, or 30% of the total. 

Stripe, with its US$95 billion valuation, is inches away from becoming a hectocorn, startups valued at a US$100 billion or more. With 250 million API requests per day and support for more than 135 currencies and payment methods, Stripe is the go-to solution for all your payment needs. Some of Stripe’s top investors include Khosla Ventures, Lowercase Capital, and CapitalG. 

Swedish startup, Klarna, valued at US$46 billion, is the second-most valuable fintech unicorn. Klarna was founded in 2005 with the aim of making it easier for people to shop online. Close to two decades later, Klarna is the leading global payments and shopping service providing purchase experiences to a whopping 147 million active consumers across more than 400K merchants in 45 countries. The startup handles two million transactions per day and has around 5,000 employees.  Klarna is backed by the likes of Institutional Venture Partners, Sequoia Capital, and General Atlantic. 

The internet software & services industry is home to 184 unicorns with a combined valuation of US$543 billion. The top five startups account for 17% of the total. Leading the list is Canva, everybody’s favourite online design and publishing tool. With a US$40 billion valuation, Canva is Australia’s most valuable startup. Launched in 2013, the startup has more than 60 million monthly active users (MAU) who have created more than seven billion designs. The startup is backed by investors such as Sequoia Capital China, Blackbird Ventures, and Matrix Partners. 

Snapshot of Miro's website
Snapshot of Miro’s website

Second on the list is the online collaborative whiteboard platform, Miro, valued at US$18 billion. Founded in 2011 by Andrey Khusid, Miro empowers remote, in-office, and hybrid teams to communicate and collaborate across formats, tools, channels, and time zones — without the constraints of physical location. Co-headquartered in Amsterdam and San Francisco, the startup has more than 30 million users. Its prominent investors include Accel, AltaIR Capital, and Technology Crossover Ventures. 

Investors with the most number of unicorns in their portfolio

Some of the industries with the largest YoY (2020-2021) increase in unicorns added are: 

  • Supply chain, logistics & delivery with a 1200% increase.
  • Artificial intelligence with a 1033% increase. 
  • Fintech with an 807% increase. 
  • Health with a 311% increase. 
  • Cybersecurity with a 286% increase. 

Unicorns are slowly losing their sheen now that they are abundant. Defined as startups valued at US$10 billion or more, decacorns are more elusive beasts and have replaced unicorns in terms of their coveted status. 

There are just 48 decacorns in the world, representing US$1.14 trillion in value, and the US and China are home to 77% of the decacorns

Industry-wise classification of US decacorns

The US has 28 decacorns which have a total valuation of US$611 billion. The country’s most valuable startup is SpaceX which designs, manufactures and launches advanced rockets and spacecraft. The startup has raised a staggering US$7.8 billion, of which US$2.27 billion was in 2021 alone. Prominent investors include the Founders Fund, Draper Fisher Jurvetson, and Rothenberg Ventures. 

The e-commerce and D2C industry has three decacorns– Fanatics, Gopuff, and OpenSea, which account for 8% of the total value of US decacorns. Founded in 2013, Gopuff is a food delivery platform that delivers daily essentials within minutes. The startup operates close to 600 micro-fulfilment centres and stores, delivering 4,000 products to customers in over 1,000 cities across the US & Europe. Gopuff has also introduced Gopuff Kitchen and already has 60+ kitchens live across the US. Prominent investors include Accel, Softbank Group, and Anthos Capital.

Snapshot of OpenSea's website
Snapshot of OpenSea’s website

OpenSea is a peer-to-peer marketplace that facilitates the trading of crypto assets and digital collectables. The startup dominates the NFT marketplace segment with more than 95% market share, according to data from Dapp Radar and CryptoArt. OpenSea’s rise to the top is explained by its support for different kinds of blockchains, strong analytics, and the credibility that it has built with verified user profiles. It is backed by the likes of Andreessen Horowitz, Thirty Five Ventures, and Sound Ventures. 

Industry-wise classification of Chinese decacorns

China has nine decacorns with a combined valuation of US$255 billion. The country is home to the most valuable startup in the world, ByteDance, the parent company of TikTok. Founded in 2012, the startup has 100k employees and multiple products and services, including Toutiao, Xigua Video, Helo, Lark, and BytePlus. Prominent investors include Sequoia Capital China, SIG Asia Investments, Sina Weibo, and the Softbank Group. 

Founded in 2006, DJI or Da-Jiang Innovations is the leading manufacturer of unmanned aerial drones and camera support accessories. From its humble beginnings in a small office in Shenzhen, Guangdong, the startup now has offices across the globe with customers from various industries such as filmmaking, agriculture, conservation, search and rescue, and energy infrastructure using its products. The startup is backed by investors such as Accel Partners and Sequoia Capital. 

Conclusion

The explosion of unicorns can be largely attributed to the low-interest-rate environment and the acceleration of the digital economy due to the pandemic. But the exuberance of 2021 has largely died down with the resurgence of COVID in China, the Russia-Ukraine War, historical levels of inflation and higher interest rates. The amount of dry powder available with VCs is shrinking, and investors are taking a closer look at their portfolios. Startups with unproven business models that were quick to raise money at high valuations face the risk of down rounds, rounds at a lower valuation than the previous one, making it harder to attract more capital in the future. 

But more often than not, unicorns have achieved their status because of their solid position in the market and the potential to scale rapidly in the future. Many have fundamentally changed consumer behaviour and are revolutionising industries. So it remains to be seen as to which unicorns will become decacorns and which ones will cease to exist. 

Analysis | Decacorn | Hectocorn | Sequoia Capital | Tiger Global | Unicorn | Unicorns | US Startups

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Rajan writes about the startup ecosystem on VCBay. He is a Master of Business Finance graduate from XIM University and has cleared CFA's Level II exam. Rajan is passionate about data viz and business journalism.

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