Unicorn Startups Then and Now
Aileen Lee coined the term Unicorn about a decade ago, referring to US-based software companies valued at over US$1 billion.
(Aileen Lee is the founder of Cowboy Ventures.)
This year, she revisited her unicorn analysis with fresh data and perspective.
As expected, a lot has changed over the 10 years.
But as an interested industry watcher, a few trends and observations caught my eye.
Here are 8 of them:
The unicorn population grew 14x (from 39 to 532). At this rate, US is on track to house ~1,400 unicorns by 2033. "As compute capacity, capability and usage increase, unicorns grow as well."
She underlines a new breed of unicorns. First, there are the "ZIRPcorns", a staple in the new group (about 60% of them). These are startups that rode high on easy money. They were last valued in 2020-2022 when we still had zero interest rate policies floating around. It also the period where almost all assets were at ATH, or heading to the moon. Now with increasing interest rates (and if the recent tech layoffs are any indicator, ) many in this group may be endangered species.
Then you have "Superunicorns" — companies valued at US$100B or more. This decade, OpenAI is likely to be the first to get this crown.
AI looks to be the megatrend for this decade. This supplants the SoMoCo trifecta megatrend from 10 years ago — i.e. Social networks (e.g. Facebook, Pinterest), Mobile (e.g. Uber, Square) and Commerce (e.g. Groupon). Other emerging trends in the 2023 list include last mile delivery (e.g. DoorDash), health (e.g. Cityblock Health), web3 (e.g. OpenSea), and gaming driven platforms (e.g. Discord). All seemingly propelled by new habits formed during COVID.
I found her observations on Founder profiles to reassuring. The average age is 35, at founding. And the sweet spot seems to be 3 co-founders. Not many changes here.
Capital efficiency appears to be coming back in vogue. This is evidenced by a swing to B2B business models (78% of the companies in the updated list.) Back in 2013, B2C models were more dominant. She explains why in the article.
7 years appears to be the typical unicorn incubation period. By contrast, premature unicorn status can spell trouble e.g. the fast rise and fall of Hopin.
Female founder representation saw slight improvement, from 5% to 14%. At this pace, Lee notes that parity may come in 2063.
Lee's write up and updated analysis offers an insightful retrospective on key shifts in the startup landscape over the past 10 years, while identifying emerging trends to watch going forward.
Read her full 22 page analysis here:
https://www.cowboy.vc/news/welcome-back-to-the-unicorn-club-10-years-later