A few months ago, Aileen from KPCB & the Cowboy Ventures team spearheaded a research initiative: “The Unicorn Club” project for TechCrunch on analyzing billion dollar companies within the past decade ‘03-‘13, in what some refer to as the vintage years of web/mobile consumerism & tech innovation.
On this hackpad, people in the online community decided to list other companies they believe should be (or are close to being) admitted into the unicorn club, that were founded sometime within the last decade. I decided to do a high-level analysis compilation of 92 companies (internationals included) listed on the hackpad, and see how their stats/avgs. compare with that of Aileen’s original 39 US-based Unicorns.
Keep in mind: we’re only talking about the top ~0.1% (~0.07% in the US) of venture-backed companies. Most data will be drawn from CB.
The above valuations are of 39 of the 92 companies analyzed that I was able to obtain — some are nearing the billion dollar mark and some have already passed it. The avg. worth of the companies here is ~$2.06B (keep in mind my dataset includes companies that haven’t hit the billion dollar mark, which pulls down the avg.) Valuations also differ drastically based on company and how well they’re doing, so it’s not alarming that the avg. is a little far off from Aileen’s $3.6B avg. worth note.
This dataset was pulled from personal research and notes/comments drawn from the hackpad post, and so it may not be a 100% accurate valuation distribution.
Other stats: 19 companies on my list went public, & only 4 were acquired. The rest are still in the private markets.
The avg. fund size for each company on my list is ~$132.21M.
The avg. raised for enterprise companies is ~$96.10M. The avg. for consumer applications is ~$173.13M. And the avg. for e-commerce companies is ~$288.66M, with LivingSocial raising the highest amount of $934.73M in private capital. E-Commerce companies have raised on avg. much more private capital than other business models, which justifies Aileen’s note:
…e-commerce companies raised the most private dollars on average — delivering the lowest valuations vs capital raised, and likely driving the recent cool down in e-commerce investing.
For a better perspective at funding, here’s a chart of companies from my list grouped into # of total funding rounds acquired to date. The avg. is 4 rounds, with E-commerce company LivingSocial & education platform Chegg leading at 10.
It’s also important to note that there’s no clear-cut distinction that enterprise needs more funding rounds in order to be successful; enterprise & consumer companies have varying number of rounds with different sizes, and we can’t say that a specific number correlates with success.
Generally, though, E-commerce requires more capital to grow, so it’s not surprising that LivingSocial went through 10 funding rounds.
My dataset distribution here parallels perfectly with that of Aileen’s statistics; the peak of most # of companies founded on my list were in 2005 & 2007, which was approximately 7-9 years ago. As Aileen mentioned:
It has taken seven-plus years on average before a “liquidity event” for companies, not including the third of our list that is still private. It’s a long journey beyond vesting periods.
It also makes sense because the closer we are to today’s date, the less we’d expect to see unicorns spawn since it’ll take more time before we see significant growth. The only companies founded in 2011/2012 were MessageMe & Snapchat, which are by far the most absurd outliers since Instagram’s phenomenon. Investors will just have to be patient before they see any serious promises in their investments.
Consumer & enterprise businesses dominate my list, with more and more enterprise software emerging within the past 5-7 years and becoming unicorns. Investors are realizing huge potentials within the enterprise space (here’s Sequoia Capital’s Jim Goetz, GP on “Building more for the Enterprise”).
A friend of mine at Stanford — Anjney Midha — also pointed out the success factors of Enterprise VC. It’s also important to re-note that the avg. raised for enterprise companies on my list is ~$96.10M — a low number compared to consumer & e-commerce’s avg. capital. As Aileen noted:
… enterprise-oriented unicorns have become worth more on average, and raised much less private capital, delivering a higher return on private investment.
To add an extra topic to this post, it’s important to note that some of the companies on my list are international (many in the European & Asian markets); 38 companies are located in Silicon Valley (SF Bay), and 70 of them resides in the US — that’s roughly 76% of my list, and therefore ~1/4 of the companies residing outside of the United States.
Although it would seem much more opportunistic to target investments only in Silicon Valley, it itself is already over-saturated with competitive VC funds and tech startups. Understandably it’s riskier to invest abroad especially if venture capitalists aren’t well versed with a different region/country. But investors should nonetheless be mindful of the open, rising FDI opportunities abroad and the rapidly growing international markets, especially in Asia & developing countries.
This post was meant to be a bird’s eye view of prospective & other unicorns that could be (or are close to being) added to the Unicorn Club. But what we could also derive out of this is the accurateness of Aileen’s analysis, and that investors and venture funds should take serious note of obvious similarities and trends dictating unicorns — that is, if they’re scouting out for their next billion dollar returns.
Disclaimer: The Cowboy Ventures fund is not held accountable for any data analysis presented on this post. All was done on personal/individual research.
- Note: that all analyses were based on companies not originally on Aileen’s unicorn list.
- Data to build charts was drawn out from TechCrunch, HackPad comments/notes, personal research & CB’s monthly exports (at the time it was downloaded on January 23, 2014.) Nothing is meant to be entirely accurate—only a rough overview.
- Hackpad’s list may have been altered by the community since I last viewed it (January 23, 2014), and not all of the companies listed there had data available on CB.
- LivingSocial no longer considered a Rising Unicorn, thanks to Boris Silver @FundersClub. Source
- *CB refers to Crunchbase, not CB Insights.
- View more on The Stanford Review: bit.ly/therisingunicorns