Findings from 300+ unicorns went public
Working on the investment strategy for our fund, I decided to examine some high-level data on unicorns that went public (companies that were privately valued at $1 billion+ and then were listed) and try to define some patterns.
I believe it may be interesting to share a few observations as an artifact:
- Out of 300, 190 IPOs were valued at more than 5x their invested capital (and almost all were valued at more than 1x), meaning that shareholder value was definitely created. The distribution of this value among them is a separate question.
- Only 71 out of more than 300 companies saw any growth post-IPO. 170 fell more than 2x, with half of those falling more than 5x.
- However, 40 of those that grew more than 2x did so on average in 4.8 years (4 years as the median).
- The average change in price at IPO (not even at the peak) over the past 36 months was 0.5x (0.73 for the 0–12 month cohort, 0.37 (!) for the 13–24 month cohort, and 0.79x for the 25–36 month cohort). But they will grow eventually, right? For older cohorts, the indicator improves significantly, except for the cohort of 8 and 9 years ago.
There are no conclusions here, except that if you had invested $1 in each unicorn IPO at the time of listing, you would now have 20 cents more. But if you happened to miss out on Shopify and Square IPO 7 years ago, you just stay with the same amount in your pockets. Let’s say you didn’t believe in Workday, Atlassian, and Zscaler either. Bad news — you would already be at a loss of 10 cents. So you have to look at each case separately, especially with unicorns.
The data is extracted from Google Finance and Crunchbase in Feb 2023, so there may be some errors (i.e. I may have missed some share splits and Chinese companies that are sometimes having incorrect profiles in Crunchbase, so it’s better to exclude them).
Definitely, the observations above may be outdated or completely different when you are reading this. So, If anyone is interested in looking at the most recent raw data and making their own notes, I am sharing the link: https://bit.ly/unicornsiposdata. Feel free to share your own thoughts and new and most recent observation you may find important.
p.s. as always, if you are at an early stage of building something great, don’t hesitate to reach our team!
