16 October 2021

COINING THE WORD UNICORN: Private VC-Backed Start-Ups Busting-The-Charts and Gouging-On-The-Feeding Frenzy

According to a report in Wired [ https://www.wired.com/story/earths-unicorn-population-is-exploding/  ] yesterday by Arielle Pardes, "When the venture capitalist Aileen Lee coined the term unicorn, in 2013, there were 39 of them—roughly four minted every year.
So far in 2021, 264 companies in the United States have reached such valuations. Around the world, multiple startups turn into unicorns every single day. . ."
Let's pause - and take a look a look back at the year 2018 five years after that name UNICORN was coined
THE STUFF OF LEGENDS (Earlier post on this blog from February 2018)
From the Crunch Network
Unicorns gorge as investors dish up bigger rounds, more capital
Globally, a staggering $66 billion went into unicorn companies in 2017, up 39 percent year-over-year, according to an analysis of Crunchbase data.
The ride-hailing space was the single largest recipient of investor dollars, with several rivals in the space raising billions. Investors also poured copious sums into co-working, consumer internet and augmented reality.
 
Sectors
Unicorn investors showed a particularly strong appetite, however, for companies in a handful of sectors.
Ridesharing, in particular, had a strong funding year, with companies in the space taking more than 10 percent of all unicorn investment.
Bike-sharing was also big. Two new entrants onto the unicorn list came from that space: Ofo and Mobike.
Other recipients of really substantial funding rounds, even by unicorn standards, include U.S. co-working giant WeWork and China-based consumer internet players Toutiao and Koubei.
 
Exiting the board

So a lot of unicorns are raising big rounds. But is there any sign members of the group will eventually produce returns for investors?

Overall, 2017 provided some modestly positive news for unicorn exit watchers.

  • Fifteen venture-funded companies with private valuations of a billion dollars or more went public last year, more than double 2016 levels and the highest total since Crunchbase began tracking the asset class.
  • Unicorn IPOs weren’t just more common in 2017. Performance was often quite good, too. Many of last year’s newly public companies sustained market caps far higher than their last private valuations.
Lately, going public seems to be a better option for investor returns.
 
Averages point to more exits ahead
> For the 45 unicorn companies that have gone public, the average time to go public has been 26 months after first being valued at $1 billion.
> For the 25 companies that have been acquired, the average time to get acquired is 24 months after first being valued at $1 billion.
 
____________________________________________________________________________
"When the venture capitalist Aileen Lee coined the term unicorn, in 2013, there were 39 of them—roughly four minted every year.
> So far in 2021, 264 companies in the United States have reached such valuations.
> Around the world, multiple startups turn into unicorns every single day.
The staggering rate at which companies reach billion-dollar valuations is just one of the ways that venture capital has busted charts this year.
“We’re looking at $240 billion invested in VC-backed companies this year, which would have seemed outrageous a few years ago,” says Kyle Stanford, a senior analyst at Pitchbook.
“There is more capital and more interest in the venture space than there has ever been.”

Earth’s Unicorn Population Is Exploding

It’s not a fantasy: VC valuations and spending on startups in 2021 are off the charts, and the year isn’t over yet.

<div class=__reading__mode__extracted__imagecaption>Between July and September, more than $82 billion poured into American startups—about as much as venture capitalists spent in all of 2017.Photograph: Adrienne Bresnahan/Getty Images

"Between July and September, more than $82 billion poured into American startups, according to a new report on Q3 data from Pitchbook and the National Venture Capital Association. That’s about as much as venture capitalists spent in all of 2017—which was, at the time, the high-water mark for venture capital spending since the dotcom boom of the early 2000s. Globally, Crunchbase found the Q3 total was $160 billion, a new record high for any quarter in history. Deal sizes have also gone up: The average early-stage deal in the US is now $20 million.

This money is pouring into all parts of the startup world, from angel investments to late-stage deals, from enterprise software to financial technology.

> More interest is coming from what Pitchbook calls “nontraditional” investors: those in private equity, hedge funds, or corporations, which have deeper pockets than the average fund on Sand Hill Road.

These investors have elbowed their way into venture capital to try to get a piece of the excellent profits. Across the market, exit value—the amount a company is worth once it goes public or gets acquired—is at an all-time high, surpassing $500 billion for the first time in a single year (with one quarter still to go). That’s already double the record from last year.

 
. . .Plenty of founders are enjoying the spoils of the funding frenzy, though.
> This year has set new records for “mega-deals,” or funding rounds in excess of $100 million.
> There have already been nearly 600 such deals in 2021, with 207 of them happening in the last three months.
With three months left to go, there are no signs of slowing down."

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