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VCs Are On Track To Make 2018 A Record Year For Unicorns

Unicorns are not zoo animals. If they were, someone might have put up a “No Feeding” sign.

Instead, investors keep throwing bigger portions at these mythical creatures. As a result, their numbers are multiplying and valuations are swelling.

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An analysis of Crunchbase data shows that global unicorn funding this year is on track to surpass record levels set in 2017. Average round sizes are ticking higher, too, as growth investors look to put unprecedented cash reserves to work.

How much money are we talking about? In the first seven months of 2018, investors put $73 billion into rounds for private venture-backed companies valued at $1 billion or more. That’s about three-fourths of the total for all of 2017, last tallied at $98 billion.

In the first seven months of 2018, investors put $73 billion into rounds for private venture-backed companies valued at $1 billion or more. Click To Tweet

Unicorn-related stats are hitting new highs in other categories, too. In the analysis below, we hone in on a few, looking at geographic breakdown, key sectors for new unicorns, and rising round sizes.

Top Countries For New Unicorns

Let’s start with new unicorns and where they’re originating. Fresh entrants are joining the club at a torrid pace in 2018. Crunchbase counts 65 newcomers so far this year, compared to 82 in all of 2017.

If you’re wondering where all the new unicorns are coming from, the patterns haven’t changed much in the past couple years. It’s still overwhelmingly the U.S. and China.

So far this year, the two countries are home to an equal number of new unicorns. India, Great Britain, and Europe account for most of the others. In the chart below, we look at the geographic breakdown:

The 2018 geographic breakdown isn’t too different from the broader pattern over the past few years, which has the U.S. and China originating the vast majority of high-valuation startups.

Top Categories For Newcomers

Who are the new 2018 unicorns? There are too many to name here, but we’ve provided a link to the full list, which continues to be updated.

Those 65 represent pretty much every significant startup sub-sector. There’s media, autonomous vehicles, ride-sharing, coffee, crypto, payments, pharma, real estate, logistics, travel.

However, a few trends stood out in our perusal of the list. For one, the ride-sharing and last-mile transit space is still minting fresh unicorns to take on (or be acquired by) Uber and its ilk. Two U.S.-based scooter-sharing startups, Bird and Lime, crossed the $1 billion valuation mark this year. Taxi platforms Taxify and Cabify also gained unicorn status.

Recommendation and personalization platforms also raised some hefty rounds. New 2018 unicorns in this space include e-commerce personalization software provider About You, curated music streaming platform Deezer, and news recommendation app Qutoutiao.

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Crypto companies passed the billion-dollar threshold, too, including Bitmain, a developer of chips used in cryptocurrency mining, and Circle, a platform for crypto trading.

Hungry Hungry Unicorns

Of course, it’s not just new unicorns that are gobbling up monstrous piles of money. Investors continue to serve up massive rounds for companies that crossed the billion-dollar valuation mark several quarters or years ago.

So far in 2018, there have been 170 disclosed equity funding rounds for both new and existing unicorn companies, adding up to a total of $73 billion. That compares to 260 rounds worth $98.2 billion in all of 2017.

About a fifth of the 2018 total went to China’s Ant Financial. In what appears to be the largest Series C funding round ever, the operator of the Alipay mobile payment app closed on $14 billion in June.

Other recipients of multi-billion-dollar funding rounds include South Asian ride-hailing service Grab, which secured $2 billion, and JD Logistics, a subsidiary of Chinese e-commerce giant JD.com, which pulled in $2.5 billion

Big Sums

It’s worth noting that the sums of private capital unicorns are raising today used to be the kind of money companies saw only with an exit—and a celebration-worthy one at that.

Now, with established venture and growth funds flush with capital, and newer investors opening their checkbooks, startups don’t need an IPO or acquisition to be worth billions.

Whether this trend will end well for private investors remains to be seen. For now, it’s clear that the unicorns are still hungry, and there are plenty of investors lining up to feed them.

Methodology

Private companies often aren’t publicly forthcoming about their latest valuations. This means the date on which a company officially becomes a unicorn can’t always be precisely pinpointed. For the Crunchbase unicorn list, the date is typically based on first known disclosure of a $1 billion or higher valuation by the company itself or a reputable media outlet.

In past quarters, the addition of China-based unicorns to the list has often involved some lag time, frequently several months. For instance, in our unicorn annual report for 2017, published in January, we initially stated that there were 63 newly minted unicorns in that calendar year. Late inclusion of mainly China-based unicorns pushed that total up to 82. In addition, we said in January that $66 billion went into unicorn rounds globally in 2017. Late inclusion of mostly Asia-based unicorns pushes that total to a revised $98 billion.

Illustration: Li-Anne Dias