30% of Unicorns Will Sell for Under a Billion Dollars

August 17, 2016

6:00 pm

Unicorn startups are those valued at over a billion dollars. So the fact that 30 percent of U.S. tech startup unicorns are on track to sell for under that impressive mark is bad news.

This data-driven sucker-punch comes through a study, published Tuesday, from SharesPost Inc, a platform for investors of pre-IPO companies. Since unicorns are venture-backed in the private market, this bit of news could be upsetting to VCs with an interest in any big unicorn exits to come.

The Facts

As Reuters explains:

“There are about 170 unicorns globally with a combined value of more than $600 billion; in 2013, when the term ‘unicorn’ entered Silicon Valley vernacular, there were 39 such companies worth a combined $100 billion. […] Roughly 30 percent of the estimated 90 U.S-based tech unicorns will either go public or get acquired at a lower valuation, according to the report. SharesPost found that, between 1995 to 2010, roughly 1 percent to 2 percent of venture capital investments achieved a $1 billion IPO or acquisition.”

Working with the assumption that VCs keep their successes at 1.5 percent, almost 30 of the 90 U.S. unicorns will have an exit under a billion.

The Result

The IPO market should be on the rise soon: These impressive companies last 7 sevens on average, and IPO companies are lasting 10 or 11. Given a dip in successful unicorn exits, IPO companies will start looking good. The widely touted post-Unicorn era might impacting those companies that are already valued at over a billion. But, interesting side-note, the 19 companies that have become unicorns in 2016 is a number on par with 2014, indicating that investors still see unicorns as healthy, safe investment opportunities.

Image: Flickr / Anders Sandberg

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Adam is a writer with an interest in a variety of mediums, from podcasts to comic books to video essays to novels to blogging — too many, basically. He's based out of Seattle, and remains a staunch defender of his state's slogan: "sayWA." In his spare time, he recommends articles about science fiction on Twitter, @AdamRRowe

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