The 50 next billion-dollar startups
Startup companies come and go. Popular opinion has it that only one out of ten makes it to the second year of operation. The graveyard is big but for those who are able to overcome it and catch their target’s attention and solve their problems, there might be a pot filled with golden coins at the end of the rainbow — I am talking about becoming a unicorn (a privately owned startup with a valuation of one billion dollars or more).
Even though it is quite hard to predict which startups will reach this prestigious level — ask any VC about it -, CB Insights and the (North American) National Science Foundation, developed an algorithm that is able to evaluate the health of startups through publicly available data and identify the ones that could reach one-horned levels. Although these are obviously predictions and quite hard to be certain, the data is real, and it has proven to be correct in past editions of this yearly research.
50 for 2020
Coronavirus played a big role in CB Insights’ forecast of who is going to be the next 50 startups to reach unicorn status. Most of the startups on this edition fulfill the needs of enterprises, as opposed to consumer needs. This year’s future unicorn list comes amidst a health disaster and a financial downturn. According to Fast Company’s journalist Mark Sullivan, “that means this year’s would-be unicorns are survivors, insulated from the current economic trauma by their business models, by the deep-pocketed faith of their investors, or by the industries they play in.”
The pandemic brought a different perspective on how companies should operate — making a forced shift from office-based operations to remote working. This transition makes enterprise solutions a must. Whatever your team’s needs are, “there is an app for that.” Moreover, there is also an increasing need to make companies smarter, using their data to make (internal and external) progress on their businesses. Both reasons explain why Enterprise solutions are one of the best-represented enterprise categories in this year’s research.
Fintech companies are the second-best represented group among the report due to the “open banking” boom, which leads banks to merge their internal systems with external data (via APIs) to create new products and services for their tech-savvy customer base. As CB Insights CEO Anand Sanwal explains to Fast Company, “these institutions figured out that you can outsource your R&D and get something purpose-built for your needs by a startup that might have access to capital and access to talent that they don’t.”
HealthTech is the third-best represented area. According to the analysts, this market still has a lot of open space for exploration by tech entrepreneurs and the new tools that were already available but were propelled by the pandemic, such as telemedicine, also take a big part in how HealthTech might be a new cluster for unicorn startups. You may also be interested in how FAMGA (Facebook, Amazon, Microsoft, Google and Apple) are targeting the healthcare industry.
Silicon Valley’s nest still dominates
Although the research is set to find the most promising startups worldwide, the research suggests that 35 out of the 50 future-to-be-unicorns are coming from the United States — 30 of these are either from California or New York. This represents 70% of the list. On the other hand, Europe’s presence, led by the United Kingdom and Germany, comes in second place with 16% of the startups on the list. Asia represents 8% and comes in third place, with India surpassing China and Singapore.
