UNICORNS: Successful Private Companies?

The Healthcare, IT AND FINANCIAL SectorS

Where Are The World's Unicorn Companies? - CITI I/O

DEFINITION: A private, non-public, company valued at more than a billion dollars.

CITE: https://www.r2library.com/Resource/Title/0826102549

Now, just five months into 2021, there were 199 new companies that reached unicorn status (a private company with a $1+ billion valuation), eclipsing the 163 companies that reached unicorn status in all of 2020, according to Crunchbase data shared with Emerging Tech Brew. And it’s not just a pandemic rebound: That figure is higher than any full-year total over the last nine years. 

Landscape lowdown 

After a 2020 full of stagnation and uncertainty, the VC scene is making up for lost time and then some. 

“Many of the concerns…that ground deal making to a halt have largely been alleviated in what many investors see as a new normal,” Joshua Chao, venture capital analyst at PitchBook told us. “We’re now seeing VCs invest in companies outside of their immediate networks and it’s just full steam ahead on deal making and fundraising.” 

Deena Shakir, partner at Lux Capital, said VCs are branching out of their traditional comfort zones to chase opportunities, leading to stiff competition and unprecedented valuations.

  • “Everyone [is] inching further upstream and downstream than their normal sweet spot,” Shakir said. “Hedge funds [are] now leading seed deals and seed funds [are] participating in growth deals.”

Why so exuberant? Blame the same Big Acceleration society underwent since Covid hit: the shift to digital. Tami Hutchinson, VP at Intel Capital, told us the pandemic-fueled digital transformation has now become “a critical must-have for all enterprises,” creating opportunities for startups to serve that need.

Health Care: Health care, financial services, and privacy and security are the most popular sectors for new $1+ billion companies, per Crunchbase. Shakir echoed that idea, saying Lux is most excited by deals at the intersections of “clinical data and AI, hardware and software, care delivery and clinical insights, [and] physical and digital security.”

More proof…

  • In Q1 2021, digital health startups amassed a record $6.7 billion in funding, on pace to eclipse the $14 billion raised in all of 2020.
  • On the fintech side, Webull, the Chinese-owned Robinhood rival, reached unicorn status in February after a $150 million funding round.
  • Israeli cybersecurity firm Wiz is an example of a fresh unicorn in the space—it was valued at $1.7 billion as of May 2021.

Looking ahead…VCs say it’s a safe bet to assume that more billion-dollar companies are on the horizon this year.

“For entrepreneurs, this is possibly one of the most founder-friendly periods we’ve seen in several years—all-time highs for valuations across the board coupled with all-time lows for deals,” Chao said.

ASSESSMENT: Your thoughts and comments are appreciated.

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One Response

  1. The UNICORN frenzy intensifies

    Less than two weeks ago, you published an article with on the unicorn frenzy.” At that point, there had been 199 new unicorns (private companies worth $1+ billion) created in 2021, per Crunchbase—up from 163 last year and already the most in a decade.

    Crunchbase now reports that 250 new $1 billion companies have sprouted up in 2021. That’s 51 more than in late June and 40% more than the previous annual record of 178, set in 2018. The biggest beneficiaries of the unicorn frenzy are health care, financial services, and privacy/security startups. Crunchbase counts 879 total unicorns worldwide, which are now collectively valued at just under $3 trillion. Since June 2020, these 879 unicorns have added $1 trillion in value. Uh, so what’s goin’ on? A few things:

    Pent-up demand from 2020

    2020’s society-level digital transformation, which created opportunities for new companies. More private equity and hedge fund involvement. A low interest rate environment that means lots of $$$ looking for somewhere to go.

    But, it’s not just the SPACs and tech IPOs. Both the public and the private markets for tech companies are scorching hot. Every stage of dealmaking—from seed to late-stage—is experiencing growth, and that she expects a strong pace of IPOs across the latter half of 2021.

    Klem

    Like

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