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The 49-Year Unicorn Backlog

If the current sluggish pace of IPOs and acquisitions continues, it would take more than 49 years for every U.S. unicorn to generate an exit.

That was the finding from an analysis of recent exits for American companies on the Crunchbase Unicorn Board. Over the past 12 months, just 15 private, venture-backed companies valued at $1 billion more have gone public or gotten acquired

Meanwhile, another 741 U.S.-based private, venture-backed companies remain in existence that met or exceeded the $1 billion threshold at their last reported valuation. If the exit tempo of the past 12 months stays the same, it would take just over 49 years to get through that backlog. 

Recent historical perspective

Luckily, one constant in the startup world is that nothing stays the same. And given that exit activity has been slower than usual this past year, it’s reasonable to expect it will pick up.

Still, it’d take some NASCAR-level acceleration to get through a backlog this big. Even in 2021, the peak year on record, a total of 86 known unicorns carried out exits, per Crunchbase data. And that was pretty unusual.

Typically, the annual crop of unicorn exits is far smaller. For the past five years, it’s averaged 38 per year. At that pace, it would still take nearly 20 years to get through the current unicorn supply. 

Not everyone exits

Of course, this is a theoretical exercise. No one expects every company once anointed with a coveted $1 billion-plus valuation will go on to exit. Some will fail, either shuttering and liquidating assets or filing for a bankruptcy reorganization.

In the past year, we’ve seen a number of private unicorns shut down or file for Chapter 11 bankruptcy. The list includes former high-flyers like trucking logistics startup Convoy, homebuilder Veev, and health benefits automation provider Olive AI.

Others could conceivably stay private indefinitely. SpaceX, the most valuable U.S. unicorn, has proven it’s possible to take this route and prosper. More broadly, a booming secondary market for shares in private companies has opened up a path to liquidity that doesn’t require a formal exit event.

Big exits make the difference

As for traditional exits, quality tends to matter more than quantity. 

Startup investment is a hits business, and just a handful of standout success stories provide a lion’s share of returns for VCs.

In this respect, the past year hasn’t been too bad. Although startup IPO valuations haven’t broken any records, we have seen some pretty large public offerings and strong aftermarket performance.

One of the leading lights of the past year is Astera Labs, a developer of connectivity technology that went public in March and had a recent market cap around $11 billion. Other standouts include Reddit ($8.9 billion market cap), Instacart ($8.8 billion market cap), Klaviyo ($6.5 billion market cap) and Rubrik ($5.9 billion market cap).

Acquisitions, however, have not delivered big unicorn exits this past year. Even some of the pricier deals — like Atlassian’s purchase of collaboration tools provider Loom for $975 million — did not cross the $1 billion mark. Others, like e-commerce aggregator Perch and online learning platform Udacity, fetched prices believed to be far below their former unicorn valuations.

More IPOs, please

Going forward, realists don’t expect all or even most onetime unicorns to achieve an exit worthy of a 10-figure private valuation. Everyone knows startup values got bubbly a couple years ago, and have since come down for most sectors.

Still, it’d be nice — and arguably necessary — to see the pace of unicorn IPOs pick up. Public markets have proven receptive in recent months. And unicorn shareholders don’t have 49 years to wait.

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Illustration: Dom Guzman


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