Any entrepreneur knows that running a startup is grueling work. Building a business from the ground up is no easy feat and the failure rate is worryingly high. Founders can expect to face long hours, late nights, and seemingly endless work if they want to make their dreams a reality.
There’s so much to plan – whether it’s the best marketing strategy, deciding if it’s time to hire more staff, or how to attract the essential funding you’ll need to keep your business growing.
That’s why startups that hit the big leagues are so remarkable. It takes a unique blend of business acumen, creativity, and a fair amount of luck to grow a fledgling business into a formidable and successful enterprise.
For those in the startup sphere, the ultimate mark of success is entry into the so-called unicorn ‘club ‘. Unicorns – named for their rarity – are startups that are worth $1 billion or more. Even for startups who have successfully raised venture capital, the chance of reaching these lofty heights is less than 1%.
What is the meaning of a Unicorn startup?
A unicorn startup is a privately held startup firm with a valuation of more than $1 billion. The word ‘Unicorn,’ coined by venture capitalist Aileen Lee in 2013, is used to describe the rare examples of such successful ventures.
Despite this, there are now hundreds of startups that have achieved this impressive valuation, from household names like Uber, Pinterest, and Reddit, to huge eCommerce businesses, and pioneers of futuristic technologies like space travel and artificial intelligence.
If you’re wondering what the ingredients for startup success are, Total Processing has compiled all the essential data into a collection of visualizations.
They include everything you need to know about the current unicorn cohort, from their sector and location to the time it took to become a unicorn from founding, as well as detailed information about the top twenty most valuable startups. We’ve brought all the visualizations together below – take a look!
Where are Unicorn Startups Founded?
For years, the vast majority of unicorn startups were founded in the USA. As the above map shows, even today 47% of all unicorns can be found there. The number of unicorns in the USA dwarfs that of other G8 countries; France, Japan, Canada and Germany all have less than five billion-dollar startups, compared to the USA’s impressive 119.
The USA’s eminence in the startup scene can be explained by a number of factors. The USA has the world’s largest economy, meaning there’s a thriving market and plenty of consumers to market products/services to. The country is also very friendly to business – in 2016, 550,000 people became entrepreneurs and launched their own businesses every month.
Entrepreneurs also benefit from access to established, thriving startup ecosystems like the famous Silicon Valley, along with other tech hubs like Seattle, New York City, Houston, and Washington D.C.
These cities often provide the basic foundation for startup success, giving businesses located there easy access to key elements like venture capital, business infrastructure, and networking opportunities. These hubs also naturally draw talented tech professionals looking for work, meaning there’s a wide pool of talent to hire staff from.
However, other countries have now started nipping at the USA’s heels. For instance, China’s tech scene has expanded rapidly in recent years. In 2013, the country boasted just two unicorn startups, but in just five years this number has swelled to 76, making it the runner-up behind the USA. Of the twenty most valuable unicorns, six were founded in China, including companies like ridesharing and taxi-hailing service Didi Chuxing, and content discovery and creation platform Bytedance.
To get a real sense of this trend, take a look at how the number of unicorn startups in each country has increased since 2009:
How Long Does It Take to Become a Unicorn?
Unicorns are often characterized by rapid growth, and often reach unicorn status in just a few years. Our analysis shows that the mean time taken was just over 7 years.
However, this can vary dramatically – some startups hit a billion dollars in just a couple of months, whilst at the other end of the scale German healthcare startup Otto Bock Healthcare took 98 years. This is an extreme example but shows just how much variation there is within the startup sector.
See all the data here:
Which Sectors Produce the Most Unicorns?
Certain sectors are more popular for startup innovation – for example, SaaS and other internet software services like Slack, along with eCommerce marketplaces, and financial technology.
All of these industries offer straightforward opportunities to monetize a product or service and turn a profit, either through selling physical products or by creating subscription-based services that companies become reliant on.
The success of businesses like Uber also drove a surge in on-demand enterprises, as founders try to find ‘the next Uber. Other unicorns in this sector include Uber rival Lyft, food delivery service Deliveroo, and grocery delivery service Instacart.
Interestingly, healthcare is also a popular and successful sector, as developments in technologies like artificial intelligence have paved the way for exciting new ways to treat illnesses, find drugs, and even expand our lifespans. It’s certainly a great choice for entrepreneurs who want to change the world, and successful startups include cancer detection innovators GRAIL, and DNA testing and genetic analysis service 23andMe.
Take a look at the following graph to see how unicorn startups are distributed across sectors:
From this graph, the most successful sectors are:
- E-Commerce –14.1% of startups valued at over $1 billion (e.g Houzz, The Hut Group, Wish, Flipkart )
- Internet Software & Services – 13.7% of startups valued at over $1 billion (e.g Slack, Canva, Squarespace)
- Fintech – 13.3% of startups valued at over $1 billion (e.g TransferWise, Stripe, Funding Circle, Kabbage)
- Healthcare & Biotech – 9.4% of startups valued at over $1 billion (e.g Human Longevity Inc, Grail, HeartFlow)
- On-Demand – 7.8% of startups valued at over $1 billion (e.g Uber, Lyft)
However, we may see other sectors emerge in the future as these industries become overcrowded and there’s less room to create something truly original.
For example, although social networks were incredibly successful for a time with businesses like Facebook, Twitter, Instagram, and Snapchat all making billions, there’s now much less room to maneuver in this niche and it’s harder for new social networks to break the established status quo. The sector, to a certain extent, is locked down.
This means we may see whole new waves of innovation in future years, especially centered on emerging technologies like delivery drones, automation, electric and driverless cars, and advanced artificial intelligence.
Unicorn Sectors Around the World
For a better idea of how sectors are distributed around the world, see the visualization below. The size of each pie chart shows the total number of unicorn startups in the country and is then divided by sector.
This shows some interesting trends across different regions. In the USA, internet software and services are the most common sector for unicorns, with 19% of the country’s unicorns working within this sector. This reflects trends in areas like Silicon Valley, where software was often the go-to choice for tech startups.
By contrast, in China e-commerce startups command the largest share of the market at 22%, whilst internet software and services sit at just 9%. This is unsurprising given that 42% of all global eCommerce now happens in China and its digital economy continues to expand.
Meanwhile, in the third-largest unicorn hub – the UK – fintech is by far the largest sector, with 40% of its 15 unicorns working in finance. The UK is one of the few places where the number of banking and payments companies has risen. Since 2005, there are three times as many financial businesses in the UK, whilst globally the number has fallen by a fifth.
This can be attributed to the fact that London has the highest concentration of financial institutions in the world, and so seems to be a natural base for fintech operations.
The Most Successful Unicorns
The 20 most valuable unicorns are true behemoths, with unbelievably high values. Their combined value is now higher than the GDP of many countries, with only 28 countries in the world having a bigger economy. The combined value is close to $400 billion – a staggering amount of money.
For all the data you need about the most valuable unicorns, take a look at the visualization below. Each company is color-coded by sector and you can hover over each to find out complete details about:
- Country of origin
- The time it took to reach a $1 billion value
- Select investors
We hope this post has shown you everything you need to know about unicorns, and perhaps inspired your next business idea! There’s definitely a lot to learn from unicorns, especially if you want to replicate their success for your own venture. Let us know in the comments!