The explosion of Unicorns on the Global Landscape
Billion Dollar Startups are blooming all over the World
Googling a unicorn turns up a strange mythical animal in the shape of a horse with a straight horn coming out of its forehead but for the tech followers, it means something else now. The word unicorn got a new definition about six years ago when Aileen Lee, a U.S-based Venture Capitalist coined the World “unicorn” in a Tech Crunch article titled “ Welcome To The Unicorn Club: Learning from Billion-Dollar Startups.” The term was assigned to a startup company which was valued at more than a billion dollars. This was the time when these kind of hefty valuations were as rare as the mythical creature itself. The tech revolution in the past few years has intensified the startup boom as capital inflows from Private equity firms & Venture Capitalists fueled this transition.
Hard to find the unicorns in the earlier days now number well in excess of 300 according to the CB Insights Unicorn Tracker with 119 companies joining the roster in the last year alone. Above chart shows the Top 10 unicorns with their current valuations. A couple of notable facts from the infographic above- First, U.S is leading the Top tier with 7 out of 10 unicorns, however, Chinese startups have hogged spot number 1 & 3 respectively. Globally popular ride-hailing service Uber is sitting at number 2 with $72 billion in valuation.
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Together the Top 10 unicorns sum up to $388 billion (or ~ 36%) of the total valuation. As per the CB tracker, there are 348 unicorns with ~ $1,165B in valuation at the time of writing. Another interesting statistic is the distribution of unicorns according to valuation range (infographic below) — which shows that majority of the companies (42.5%) lie at the bottom range of $1–5 billion. Now, Let’s take a brief look at the business models of the Top 10 unicorns.
- ByteDance — The World’s largest unicorn is Beijing based Chinese internet technology company founded in 2012 which owns several machine learning enabled content platforms including Toutiao, TikTok, Faceu & Helo among others.
- Uber — The second biggest unicorn is a U.S-based Peer-to-Peer ride-sharing transportation company that was formed in 2009 & is perhaps the most well-recognized unicorn brand names globally serving 785 metro areas.
- Didi Chuxing — Another Beijing-headquartered transportation company which started its services in 2012 offering services like social ride sharing, bike sharing & food delivery etc. in China. However, the company is also making a global footprint with the recent service launch in Japan & multiple investments in other startups around the globe.
- WeWork — This New York-headquartered American company provides Shared workspace, Private offices & Event space for entrepreneurs, freelancers, startups & small and large businesses alike. The company has reportedly managed about 10,000,000 square feet of workspace ever since its establishment in 2010.
- JUUL Labs — The most popular e-cigarette company in the U.S with a market share of 72% as of Sep. 2018 is a spin-off from its parent company PAX Labs. It profiles itself to be a vapor alternative with its unique profile, interface & flavor variety. This California-based unicorn has shown tremendous growth since its inception in 2017.
- Airbnb — A respected brand & globally used service. The company provides an online marketplace for hospitality services via their website or by using their App. The popular unicorn was conceived in 2008 & calls San Francisco its home. Whether you are looking for a place to stay for your next vacation or looking to host your home, Airbnb is the answer.
- Stripe — Yet another San Francisco-based unicorn is revolutionizing the online payment industry. It takes out the hassle of running an internet business by providing payment processing APIs which the clients can integrate into their websites or mobile applications. The company started the business in 2011.
- SpaceX — This privately held American aeronautical company was created in 2002 with an aim to revolutionize space technology & travel. The company designs, manufactures and launches advanced rockets and spacecraft which can be recycled & reused.
- Epic Games — It is one of the very few companies in the unicorn club which has been in existence for almost three decades — established in 1991 as a video game and software development company based in North Carolina, it is still going strong. With popular games like Fortnite, Infinity Blade, Gears of War, and Unreal under in its portfolio, acquisitions & increased seed funding the company has joined the prestigious unicorn club.
- Grab — Grab Taxi Holding Private Ltd. is a transportation network company based in Singapore offering ride-hailing services, food delivery & digital payments via their mobile app. Ever since its founding in 2016, the unicorn has expanded its services to Malaysia, Indonesia, Philippines, Vietnam, Thailand, Myanmar, and Cambodia. The company has added 4 new features for Singapore users recently where they can do journey planning, book hotels, movie tickets & enjoy on-demand content directly from the Grab App.
This last infographic (above) shows the unicorns distribution by geographic regions & by sector. China & U.S are clearly dominating the market with U.K, Germany, India & South Korea far behind, while the rest of the World only produced 32 unicorns. Sector-wise, Internet services leads the pack with E-commerce, Fintech & Healthcare next in line. However, the valuation of the On-Demand unicorns tops the list.
The phenomenal growth of these unicorns has encouraged them to float their businesses for public offering. Analysts expect 2019 to be a bumper year for IPOs as more than 100 unicorns are expected to float their stocks. We have already seen a number of high-profile IPOs launched this year, including the likes of Lyft (ride-hailing), Pinterest (social media) & Zoom Video (communication & conferencing). But the most anticipated ones are Airbnb & Uber — actually Uber (three-times oversubscribed) is hitting the public market today as we speak. It goes to show how far these startup companies have come within a decade integrating themselves in the global ecosystem. The amazing adoption rate by the consumers enabled by the emerging technology has made sure that these futuristic players are here to stay.
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Originally published at https://www.datadriveninvestor.com on May 9, 2019.