Celebrating 9 Unicorns
A few weeks ago, P9 Family member Loom announced that it has raised $130 million at a valuation of $1.5 billion, making it the latest addition to the P9 Unicorn Club. In the last couple of months this club has gotten almost a little crowded: Mambu, Chainalysis, Clio, Westwing, and now Loom, have all entered this exquisite sub-group of the P9 Family.
Loom has brought the P9 Family unicorn count to nine, which is a̵n̵ ̵e̵x̵c̵e̵l̵l̵e̵n̵t̵ ̵e̵x̵c̵u̵s̵e̵ ̵t̵o̵ ̵b̵r̵a̵g̵ a good occasion for some reflection and celebration.
When Pawel and I started investing we would have never in our wildest dreams expected to invest in so many companies that would eventually reach a valuation of $1 billion or more. Seriously. This isn’t some kind of humblebrag, we-feel-so-humbled, fishing-for-compliments type of smart-ass VC BS. If a founder had told us “I want to build a billion-dollar company” back in 2008, we probably would have thought to ourselves “yeah, dream on”.
To our defense, recall that this was a time when StudiVZ’s ~ €85 million sale to Holtzbrinck and Brands4Friends’s ~ €150 million acquisition by eBay were the largest exits in Germany. Things were similar in other European countries. There was Skype (acquired by eBay in 2005 for $2.6 billion), but Skype was considered a once-in-a-decade outlier. Our thinking was that “betting on unicorns’’ would be way too risky. We thought it might take hundreds of seed investments to get to one $1 billion company.
One of the things we liked about B2B SaaS was that in comparison to consumer Internet companies, the outcomes are less binary. Our thinking was that if we can get to a few exits in the €200–300 million range (pretty much the best-case scenario we imagined for most investments), plus a few smaller exits and not too many losses, we’d be able to generate a good return on our €40 million fund.¹
We eventually internalized the power law dynamic of venture capital returns, but even in 2015, we were still saying that we were “hunting for dragons, hoping for unicorns” because we thought of unicorns as an exceedingly rare species. Having seen so many of our seed investments get to massive scale has made us much bolder, and we owe that to the founders of companies like Chainalysis, Clio, Delivery Hero, Loom, Mambu, Tier, Revolut, Westwing and Zendesk.
When you start a new company, it can feel like the odds are stacked against you (and statistically they are)². Building a unicorn company requires an almost superhuman level of commitment. You have to obsess about success. You probably have to be an animal of some kind. In other words, you have to be slightly crazy. But there’s always been a fine line between genius and insanity, right?
This is to the ones that beat the odds. The underdogs. The dark horses, who became unicorns:
PS: To all the other P9 Family members — the Soonicorns, the Maybecorns. Today is the day when we celebrate our current unicorns. Your day will come, too! :-)
¹⁾ Interestingly, I remember that in one of our first meetings with Horsley Bridge (our first and largest institutional LP, and a great supporter for almost a decade), they shared data with us showing that virtually all VC funds with a > 3x return have at least one fund-returner investment. The corollary of that is that in VC, the biggest risk is not taking enough risk.
²⁾ As this study showed, partnering with the right investor may slightly shift the odds in your favor. ;-)