You know what they say: they’re all grown up before you know it! 2023 marks a decade of the so-called unicorn startups. Rare and valuable, achieving “unicorn” status is a start-up dream-come-true for founders and investors alike. But the unicorns of 2023 are starting to look a little different to their mythical friends from previous years.
What is a unicorn?
Venture capitalist and founder of Cowboy Ventures, Aileen Lee created the term in 2013 to describe billion-dollar software companies.
Some believe the term only applies to startups, whilst others pin it down more, defining unicorns as VC-backed companies valued at $1 billion or more.
Companies lose their unicorn status if their valuation drops below $1 billion or they no longer need VC backing due to being acquired or going public.
How common are unicorns?
According to PitchBook’s Unicorn bible, there are currently 1323 active unicorns globally, a huge increase from the 39 startups that met Lee’s criteria back in 2013.
Some of the best known and most valuable include Chinese sensation ByteDance, Stripe, and the now infamous OpenAI.
Are they endangered?
Despite the huge increase in billion-dollar valuations over the last ten years, unicorns are starting to become more rare again.
Companies achieving unicorn status hit a peak in 2021 when 606 startups proudly donned their shiny white coats and placed glittery single horns on their heads.
That number dropped by 42% YOY with only 349 unicorns crowned in 2022. Now halfway through 2023, only 44 startups have achieved that billion-dollar valuation.
Where can I find a unicorn?
Much like in Fintech, the US is the place to go if you’re looking for unicorns; just over half (695 companies) call the US home.
China has around a third of that number (265), with India (66), the UK (45) and Germany (27) below the 100 unicorn threshold.
But don’t saddle up and head for the US just yet. In 2023’s class of unicorns, less than half are in North America (48%), with the percentage of unicorns in Asia growing to 32%, up from around 20% in 2022.
What does my unicorn do all day?
This year’s unicorns are also a little different when it comes to how they make their billions.
In the 2021 peak, the top industries for unicorns were IT, healthcare and consumer-facing products and services.
Whilst IT remains first past the post, B2B and energy focused businesses have climbed up the tables, taking second and third place respectively.
The next decade of unicorns
In the current economic climate, funding is harder to come by and investors are more wary.
Startup valuations reflect this. In Q1 2023, only 71% managed to achieve a higher valuation than previous rounds, with almost one in five experiencing a “downround”.
Unicorns are becoming rarer, and that’s a trend that’s likely to continue. But that might not be a bad thing. Unicorns are supposed to be rare. They’re the magical exception to the tough reality of startups.
Being less focused on racing to the billion-dollar valuation might just give some promising startups the room they need to breathe, reflect, and to build a sustainable business that’s a trusty steed rather than a glamorous myth.
Need your next jockey?
Whether you’re at the billion-dollar mark or fresh out of the stable, we focus exclusively on putting the right sales team in place to grow your Fintech business. If you’d like to find out more about sales roles in the start-up sector, we’d love to hear from you. And if your business is growing in this industry and is looking to attract some great talent, we think Finiti Search can help.
Get in touch to find out more about how we can help – no more horse puns, we promise.
