Klarna’s Fall From Grace Calls Into Question Unicorn Board Valuations

Gené Teare @geneteare

The explosive growth in value and funding for startups on The Crunchbase Unicorn Board appears to be leveling off as 32 companies joined in June, adding $49 billion in value and $7.7 billion in funding to the board.

In addition, payment fintech Klarna’s massive downround this month calls into question the board’s $4.6 trillion value in June, as Klarna is now poised to topple from its heady No. 6 spot.

Klarna shed $39 billion in value from the board with its most recent $800 million funding that valued the company at $6.7 billion. Klarna is now valued below Europe-based online payments integrators Checkout.com, Rapyd and point of sale payments SumUp, but valued above payments integrator Mollie.

This 86% drop also calls into question many highly valued unicorns on the board.

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Stripe, currently the 5th most highly valued private company, and Instacart in the 8th spot, have each revalued their internal stock via a 409a process to provide options to new employees at a lower price. However, they remain on the Unicorn Board at their most recent valuation in a funding round each from 2021, the peak year for unicorn creation and newly valued decacorns. 1

Despite these writedowns, June’s Unicorn Board numbers remain on par with May when 34 companies joined the board and added $57 billion in value and $8.3 billion in equity funding raised.

Last month’s new unicorn count is down from June 2021, when 52 companies joined the board.

These new unicorns hail from 10 countries. Of those, 17 are headquartered in the U.S., eight in Asia, six from Europe and one from Latin America.

Exits

Two companies exited the Unicorn Board via SPAC mergers. Regular IPOs were on hold this past month.

Polestar is a Sweden-based electric vehicle company spun off from Volvo, which is owned by Chinese automaker Geely. Polestar launched on Nasdaq on June 24, and was valued around $21 billion at its IPO. As of July 19 it is valued at $20.57 billion.

San Francisco-based Grove Collaborative, a creator and curator of planet-first personal care products, launched on the NYSE on June 17. As of this report, the company is valued at less than $1 billion.

Overvalued?

A year ago, as of the end of June 2021, the Unicorn Board was valued close to $3 trillion with a total of $564 billion in funding raised by those startups. In the 12 months since, that value has grown over 50% to $4.6 trillion with a more than $200 billion increase in funding to a total of $786 billion raised by current unicorn companies.

Overvalued companies on the board is not a new phenomenon. WeWork was valued at $47 billion at its peak in 2018, only to lose much of that value. WeWork eventually went public in 2021 at a valuation of $9 billion.

However, we are now seeing a wholesale questioning of the value accrued across this whole asset class based on the massive correction in public market technology stocks.

Since the close of 2021—in a six-month time period—$800 billion in value was added to the board. However, based on recent trends, it is unlikely for that valuation hike to continue for the second half of 2022. And topping $5 trillion this year is looking less likely.

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Methodology

Funding rounds included in this report are seed, angel, venture, corporate-venture and private-equity rounds in venture-backed companies. This reflects data in Crunchbase as of July 18, 2022.

The Crunchbase Unicorn Board is a curated list that includes private unicorn companies with post-money valuations of $1 billion or more and is based on Crunchbase data. New companies are added to the Unicorn Board as they reach the $1 billion valuation mark as part of a funding round.

Funding to unicorn companies includes all private financings to companies that are tagged as unicorns, as well as those that have since graduated to The Exited Unicorn Board.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Illustration: Dom Guzman