What's Going On With Unicorn Companies In 3 Charts

Here’s how to earn a unicorn valuation in 2023 in one easy step. Ready?

Step 1: Already be a unicorn that’s raised bales of VC cash.

That’s what it seems to take to raise a big round these days. Of the 10 biggest venture rounds in April, four of the top five were raised by established unicorn companies that’d already raked in hundreds of millions in the past few years (or in the case of OpenAI, tens of billions in the past few months).

The continued success of established players might make it tougher for ambitious startups to catch up with the unicorn herd. Only five companies joined The Crunchbase Unicorn Board in April 2023 — the sixth month in a row for new unicorn companies to number in the single digits. To absolutely nobody’s surprise, three of the companies were in the AI sector.

And once startups do manage to join the herd, keeping up is hard to do. Two companies dropped from the unicorn board in April: AI home gym Tonal and security company Cybereason. Both raised an admirable $130 million and $100 million, respectively, but were soon outstripped.

Still, it’s not always easy to be a unicorn either. Of the $21 billion in global venture funding raised this past month, $4.4 billion was invested in unicorn companies. This is a smaller percentage than previous months in 2023, when unicorns averaged a third of all funding.

And that $21 billion raised in April looks less impressive compared to global venture funding a year ago. Global funding fell 56% in April from $47.8 billion in a year-over-year comparison. This is the second-lowest amount recorded in a single month since July 2022 when venture capital started to scale below $30 billion.

The slowdown has impacted all funding stages. Seed was down more than 50% year over year, while early-stage funding dropped 48%. Late-stage funding was down the most at 62%.

Regardless of the venture capital landscape, many investors love to chase the brightest flag: This year that’s clearly AI, while last year’s biggest darling before its crash was cryptocurrency, and 2021’s flag was, well, everything.

The encouraging thing about AI, however, is the technology’s possible applications to nearly every sector. And for many startups, AI might just be the spur to help some of them catch the unicorn herd.