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Analysts at a loss: There are too many unicorn startups

Author
Valery Moiseev

Today, there are 917 unicorn startups in the world with a total valuation of $3,019 billion. There are days when several companies become unicorns at once. For example, on November 18, three companies were added to the list, and on November 16, 10, 9, and 8—two each day. Such data are cited by the outlet CB Insights.

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The unicorn startup is a private company with a valuation of over $1 billion. At the time, Airbnb, Facebook, and Google were unicorns. Now the CB Insights list is topped by the Chinese Byte Dance (owner of the social network TikTok) with a valuation of $140 billion and Elon Musk’s space rocket company SpaceX (valuation of $100 billion). There are many other well-known companies on the list that can hardly be called startups. But the analysts do not have a definite answer to the question of when a company stops being a startup. The most common answer is: "It depends on the circumstances."

Not so long ago it was believed that as soon as a company got a valuation of $1 billion valuation, it ceased to be a startup. But according to venture capitalists and investors, immature startups are increasingly becoming unicorns, TechCrunch notes.

The $ 1 billion mark was an indicator that the startup had shown outstanding success and deserved the nickname "unicorn." But when there are several such companies a day, this indicator has lost its value as a benchmark for investors.

The $1 billion frontier was an indicator that the startup had shown outstanding success and deserved the nickname "unicorn." But when there are several such companies per day, this indicator has lost its value as a benchmark for investors.

Proposals are being made to raise the bar to $10 billion. Perhaps this will really filter out "what should be paid attention to the "companies heating up" and "potential but few material results yets."

For startups worth $10 billion, the name "dragon" has already been proposed, another variant is "decacorn". There is also a more radical proposal: to set the $100 billion frontier for "hectocorns".

In 2013, when the term unicorn was coined, there were only 39 such startups—fewer than "dragons" today.

Analysts name the following among the reasons for the devaluation of the name "unicorn":

  • the growing popularity of venture capital investments;
  • there is more free money on the market;
  • foundations has begun to pay more attention to startups;
  • companies stay private longer and do not rush to the stock exchange.
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