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'Super-unicorns', U.S. supremacy

11/16/2015 10:02
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In the first three months of 2015 more than 13 billion dollars were invested in the development of young American companies.

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Who is king of the unicorn world? Without doubt, Silicon Valley. In the technology sector, 'unicorn' is the name given to a startup, usually created within the last 10 years, that is worth more than 1 billion dollars without being listed on the stock market. Aileen Lee, a venture capital expert, coined the term in late 2013, counting just 40 or so non-listed high-tech enterprises worth something in the region of this amount. Since then, so many have unicorns have been born—most as a result of the success of the mobile Web and pure venture capital products—that they have lost their rarity value completely. In fact, the number just keeps on growing, with no apparent end in sight for the moment.

The first quarter of 2015 saw the birth of more than 80 unicorns worldwide, 50 of them in the United States. This resurgence is explained by the sheer number of funding rounds that startups are carrying out, especially those located in Silicon Valley, as this study shows.

Meanwhile, the data published by the auditors EY demonstrate that 87 billion dollars were injected in venture capital in 2014, compared with 43 billion dollars in 2006. But if 2014 was a record year in this respect, 2015 promises to be just as prosperous for startups. In the first three months of 2015 more than 13 billion dollars were invested in the development of young American companies. According to the National Venture Capital Association, this figure is equivalent to more than 1,000 financial transactions and represents a sum not seen since the dotcom bubble burst in the year 2000. High-tech unicorns are a prolific species. In fact, some of them have even be renamed 'super-unicorns' because of their potential worth, thought to be in excess of 10 billion dollars. Xiaomi, Uber, Instagram, Airbnb and Snapchat are all in this latter category; Shazam, Jawbone, Evernote, Square, etc. in the former category.

Super-unicorns

Unicorns and super-unicorns are characterized by the rapid growth of their financial value. Uber, which operates an urban transportation service between individuals and is present in more than 250 cities around the globe (500,000 users in France), raised 2.4 billion dollars in 2014 and more than 1.6 billion dollars in January 2015 (from Goldman Sachs). Its value grew to 41.2 billion dollars in the first quarter of 2015, compared with 3.8 million in August 2013.

Another example: following the announcement of an additional 1 billion dollars raised in the spring of 2015, the accommodation booking website Airbnb, founded in 2008 and now present in 190 countries, is worth 20 billion dollars, more than the major international hotel chains. In March 2015 the social media site Pinterest managed to close the circle that enabled it to raise 367 million dollars, thus doubling its value to 11 billion dollars, compared with just 5 billion 10 months earlier. In July 2014 the online store Flipkart carried out the largest funding round ever undertaken by an Indian website, raising 1 billion dollars in fresh capital. Lesser-known super-unicorns include Palantir, which specializes in big data  related to security, with clients like the CIA, FBI and NSA; and Dropbox, an online storage service. In 2014 these managed to secure fresh investments of 500 million and 350 million dollars, respectively.

Europe wakes up

China is the main threat to the USA's hegemony in the "unicorn world", but it hasn't been a bad year for European countries. Startups raised 37% more funds in 2015 than in 2014, equivalent to 7.8 billion dollars. Europe saw 53 funding rounds in excess of 30 million dollars in 2014 compared with 33 rounds in 2013, according to data published by Clipperton and Digimind. Some rounds attracted hundreds of millions of dollars. Delivery Hero, the German startup specializing in online food ordering, raised 523 million; Ayden, the Dutch online payment service, raised 250 million, and a Russian online retail store walked away with 150 million dollars.

However, the United Kingdom leads the startup world in Europe. Young British companies attracted a total investment of 2.3 billion dollars in 2014, double the funds raised by their French counterparts—1.2 billion in 245 transactions. And for the moment, still counting.

For more information:

Unicorns: Another bubble?

By BBVA Innovation Center