‘Winners Take None’ Is A Mantra For Many In The Unicorn Era

When heavily funded startups vie for dominance in a hot, emerging sector, we usually expect at least one will come out on top.

But in case after case lately, that hasn’t happened. Rather, in spaces from co-working to scooters to used car sales, multiple unicorns have simply petered out.

“Winners take none” is the phrase that Hunter Walk, partner at seed and early-stage investor Homebrew, used in a recent blog post to describe this phenomenon. He notes that investors committed vast sums to multiple markets where fast scaling and large capital expenditures failed to produce successful companies.

So in which sectors has this theme been playing out most conspicuously? Using Crunchbase data on unicorn rounds, we put together a list of areas where startups raised gobs of cash without yet producing an emergent winner or winners.

Top sectors in which winners have not emerged

Co-working: WeWork, which raised over $7 billion in venture funding before going public in 2021, warned this week that it may go bankrupt. Its downward trajectory illustrates that even the most well-known and heavily funded startup in the co-working space wasn’t able to build a sustainable business. Others that raised funding when the flexible workspace sector was hot — including Knotel and Ucommune — have also struggled.

Scooters: Between 2017 and 2021, venture capitalists poured billions into so-called micromobility startups, most of which relied wholly or partly on electric scooters. This bet hasn’t gone particularly well. Bird, the first unicorn in the space, is now a penny stock. Many of the most heavily funded players in the space, meanwhile, haven’t raised equity funding in years.

Fast grocery delivery: Ultrafast grocery delivery was also an area where billions were invested, and no clear leader has emerged. The instant grocery delivery services Gorillas and Jokr were quick to soar and then falter. The two raised more than $1.7 billion in 2021 and 2022, then later moved to cut staff and shutter regional operations. And Philadelphia-based Gopuff, which raised more than $3 billion in equity funding, has also reportedly made multiple rounds of layoffs.

Autonomous vehicles: From the mid-2010s through the IPO boom of 2021, autonomous vehicle-related startups were a popular sector for venture investors. But on public markets, they promptly drove themselves off a cliff. An October analysis of 14 companies that went public in the prior couple years shows an average post-debut decline of more than 80%. When we revisited just now, we found the majority have since declined further, and not all are still going concerns.

E-commerce aggregators: Copious sums also went to e-commerce aggregators, or startups that make a business of buying up smaller online retailers selling on Amazon and other platforms. Thrasio, Perch, Branded, Society Brands, Razor Group and others raised billions in equity funding and billions more in debt financings. In recent quarters, funding has largely dried up, followed by layoffs and some consolidation among once high-flying players. We’ll stay tuned to see if an emergent winner comes out on top.

Used cars: These are tough times for venture-backed used car startups, several of which are now public and faced with the combination of declining vehicle prices, rising interest rates and growing inventory. Shares of Cazoo and Vroom are down more than 95% from their peaks, and a merger between two other used car platforms, Shift and Carlotz, has also performed poorly. Meanwhile stock in Carvana, known for its iconic towers of cars, has staged a comeback in recent months, but is still far off its former highs.

Those are just a few examples

The above are just a few examples of spaces where major funding went in, and no obvious winners have come out. Other areas that come to mind include meal kits, ghost kitchens, virtual events, moving and storage, and vertical farming.

The existence of so many case studies indicates that the idea of competition always producing a winner should be left to the sports world. In the startup space, fierce rivalry does not always translate into success for the fiercest.

Illustration: Dom Guzman