How to Catch a Unicorn

Extraordinary economic growth is fueling an unheard-of expansion in the ranks of private companies worth one billion dollars or more. And that’s fantastic news for economic developers and investors seeking to attract new activity to their own regions. Continue reading below to discover some of the more fascinating players, industries, and trends in this rapidly expanding subsector of startups.

November 14, 2022

Wait…what’s a unicorn?

Obviously, we’re not talking about horses with horns here. Instead, unicorns refer to privately-held companies that have achieved reliable valuations of $1 billion or more.

(Incidentally, they’re part of an entire stable of – sometimes mythical – creatures that refer to companies of various kinds. Check out the linked article for descriptions of the elephants, gazelles, and pegasi that make up the startup ecosystem.)

You probably already knew that but, hey, we had to be sure.

So, what’s going on with unicorns?

What isn’t?

2021 has been a demonstrably active year for unicorns, with more billion dollar companies being created in the second quarter of 2021 (136) than in any other quarter in history. And while much of the explosion in the number of companies valued at over one billion dollars is arguably due to economic growth in the United States, many of the world’s top VC firms invest heavily in other nations. China, in particular, is increasingly a global contender. It’s home to the world’s most valuable unicorn, ByteDance (owners of the social media platform TikTok), which has been valued at over $140 billion.

Gazelle Unicorn Data

What’s hot?

In a word? Fintech.

Fintech companies claimed about one out of every five dollars raised by startup companies in the second quarter of 2021. Companies like Stripe and Nubank (based in Brazil) are battling to become the next Paypal and gobbling up the lion’s share of VC funding in the market.

Stripe, in particular, is a remarkable example of what’s possible in today’s red-hot, founder-friendly market. Having raised $2.2 billion in funding over 17 rounds, the last of which was on March 14, 2021, Stripe is flush with cash and valued at over $95 billion. It’s said to be exploring a merger with a Special Purpose Acquisition Company (see below for an explanation of what that actually means) which may take place sometime after this year.

A word of caution

Gazelle Global Startup Funding

A 157% year-over-year increase to global startup funding!

A 491% year-over-year increase in unicorn creation!

These sound like incredible statistics. And they are indeed impressive. But we’d all be well-served by just taking a second to remember where we were in the second quarter of 2020. Namely, we were locked in our houses while Covid-19 was doing its first full lap around the planet.

The pandemic, and the ensuing economic turbulence, have made it difficult to pull any kind of reliably actionable guidance from the numbers in the last 18 months. So, while we may be witnessing the beginning of a boom in unicorn creation, we may also just be seeing the release of the economic potential that had been bottled up during successive lockdowns.

Going public: A fork in the road

Modern unicorns anticipating going public face a choice not considered by companies of the past. Namely, do they avail themselves of the option of merging with a Special Purpose Acquisition Company (SPAC), or do they go through the traditional Initial Public Offering process?

In a SPAC merger, a pre-existing publicly listed shell company acquires the company seeking to go public. In an IPO, the company going public moves through a due diligence and valuation process in partnership with one or more investment banks. In addition, it must satisfy stock exchange requirements and those of the Securities and Exchange Commission (if the company is located in the United States).

Different companies weigh the pros and cons of each path to becoming listed on a public exchange differently. For some, the compressed timelines and reduced financial due diligence of SPAC mergers are a godsend. For others, they may be a curse.

In 2021, unicorns like Robinhood and Duolingo went the IPO route. According to public reports, others, including Nextdoor and Roblox, are poised to merge with SPACs in the coming quarters.

What does the future hold?

While anyone who claims to know what tomorrow looks like when it comes to the world of startups probably also has a bridge to sell you, at least one trend has become increasingly hard to ignore. As is pointed out by Alex Wilhelm in his article on TechCrunch, “Trillion-dollar horses, surfeit funding rounds, and Future’s future,” unicorns across the globe now possess a combined 2.4 trillion dollar valuation between them.

It’s difficult to see how this amount of equity – currently locked up in the private markets – can be unloaded onto the public markets in a timely fashion. That’s even more true when you consider that the rate of unicorn creation is accelerating faster than unicorns are exiting.

So how will this small army of founders and owners unlock all that value that’s been built up in their companies? Only time will tell.

Top 20 Unicorns

Economic developers and investors should keep a close eye on companies that show the kinds of growth trajectories we regularly see in unicorns. These hypergrowth entities can single handedly transform a region, bringing high-value jobs, wealth, and an expanded tax base. And, these days, there are more of them than you can shake a digital stick at.

Now, here’s a sneak peak of the 20 fast-growing Unicorns. Want the full list and everything you need to catch a Unicorn? Simply get the full list, by starting a free trial here.

1. Revolut

Revolut is a fintech company that delivers a frictionless, digital banking solution allowing users to transfer, exchange, and spend money with a multi currency card that is accepted everywhere.

2. Toast

Toast is a cloud-based software company that provides an all-in-one point-of-sale and restaurant management platform for businesses in the food service and hospitality space.

3. UBTECH Robotics

UBTECH Robotics is an AI and robotics company that designs, manufactures, and sells humanoid robots.

4. Apeel Sciences

Apeel Sciences is a California-based company that’s fighting the $2.6 trillion-dollar global food waste crisis by utilizing advances in materials science to prevent waste in the first place—a sustainable approach to the world’s growing and urgent food demands.

5. Locus Robotics

Locus Robotics develops and manufactures intelligent autonomous solutions to support e-commerce fulfillment operations for retailers and warehouse logistics providers.

6. Quanergy Systems

Quanergy Systems is a software company that offers smart sensing solutions.

7. Sennder

Sennder is a leading digital road freight forwarder in continental Europe, linking large commercial shippers with small freight carriers.

8. Outreach

Outreach is a sales engagement platform that accelerates revenue growth by optimizing every interaction throughout the customer lifecycle.

9. Fair

Fair is a car leasing company that aims to grant access to mobility to everyone by pioneering the car-as-a-service (CaaS) concept.

10. Rapyd

Rapyd is the mobile-first financial network that makes the world’s favorite ways to pay and be paid instantly available through a single API and SDK.

11. Orbbec

Orbbec is a developer and supplier of 3D motion sensors, led by a group of top level 3D vision and artificial intelligence specialists.

12. Netskope

Netskope, the SASE leader, safely and quickly connects users directly to the internet, any application, and their infrastructure from any device, on or off the network.

13. Contentsquare

Contentsquare is a software company that provides an innovative platform to analyze customer behavior through billions of anonymous web, mobile and app interactions.

14. Gopuff

As the fastest growing digital convenience retailer, Gopuff delivers everything you need—food delivery, home essentials, snack delivery and alcohol in select markets.

15. Northvolt

Northvolt’s mission is to establish a supply of sustainable batteries in Europe and enable the future of energy

16. Quantum Metric

Quantum Metric is a SaaS technology company that offers a real-time cross-device digital intelligence analytics platform that aims to capture user behaviour insights.

17. Moveworks

Moveworks is a cloud-based AI platform purpose-built for large enterprises that solves one, big, frustrating problem: Resolving employees’​ IT support issues.

18. Zipline

Zipline has developed an autonomous medicine and medical supply delivery system using drones launched and landing at delivery centers.

19. Cognite

Cognite is a global industrial AI Software-as-a-Service (SaaS) company supporting the full-scale digital transformation of heavy-asset industries around the world.

20. Workato

Workato is an intelligent automation platform designed to automate work in businesses.

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