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The term “unicorn” was coined by venture capitalist Aileen Lee in 2013, to describe startup companies that reached a $1 billion post-money valuation.
The catchphrase — from the title of her article, “Welcome to the Unicorn Club: Learning From Billion-Dollar Startups” — was immediately and widely adopted, as it conveyed both the rarity and the somewhat mythical status of companies that hit the $1 billion benchmark.
Back in 2013, Lee counted 39 unicorns in the U.S. It was still considered exceptional for a private company to grow to that size without having an initial public offering or IPO.
Today, there are about 1200 to 1400 so-called unicorns globally, depending on the criteria used to identify these companies. But owing to a confluence of factors, including tighter capital markets, the number of unicorns has declined steadily in the last decade.
Key Points
• A unicorn is a startup that reached a post-money valuation of at least $1 billion.
• The term was coined by venture capitalist Aileen Lee in 2013. At the time it was an apt way to describe startups that attained a mythical level of success without an IPO.
• While unicorns are associated with Silicon Valley, unicorns can be found worldwide.
• Countries with the highest number of unicorns include the U.S., China, India, U.K., and France.
• Globally, the number of unicorns peaked in 2021, and has declined since then.
Top 10 Most Valuable Unicorns
As of January 2025, there are some 1,258 unicorns worldwide, with a cumulative business valuation of roughly $4.4 trillion, according to research by CB Insights, a business analytics platform.
Unicorns can be exciting for investors because they can represent rapid — even seemingly magical — growth. But are unicorns actually good investments? It’s important for investors to remember that, by definition, these companies haven’t yet come under the scrutiny of public markets.
Below is a chart of the unicorn companies with the highest valuations globally, according to CB Insights, as of January 2025.
| Company | Valuation | Date Added | Country | Industry |
|---|---|---|---|---|
| SpaceX | $350 billion | 12/1/2012 | U.S. | Space |
| Bytedance | $300 billion | 4/7/2017 | China | Media & Entertainment |
| OpenAI | $300 billion | 7/22/2019 | U.S. | Enterprise Tech |
| Stripe | $70 billion | 1/23/2014 | U.S. | Fintech |
| SHEIN | $66 billion | 7/3/2018 | Singapore | Consumer Retail |
| Databricks | $62 billion | 2/5/2019 | U.S. | Enterprise Tech |
| Anthropic | $61.5 billion | 2/3/2023 | U.S. | Enterprise Tech |
| xAI | $50 billion | 5/6/2024 | U.S. | Enterprise Tech |
| Revolut | $45 billion | 4/26/2018 | U.K. | Financial Services |
| Canva | $32 billion | 1/8/2018 | Australia | Enterprise Tech |
Source: CB Insights, as of January 31, 2025.
Characteristics of Unicorn Companies
The increase in the number of unicorns over time has meant that these companies come from a range of industries, sectors, and regions.
Unicorns by Industry
According to Crunchbase, as of June 2025, the top seven sectors with the largest number of unicorns are as follows:
• Software (894)
• Financial services (404)
• Information technology (383)
• Science and engineering (387)
• Data and analytics (379)
• Internet services (299)
• AI (283)
Unicorns by Geography
While the Bay Area’s Silicon Valley is still synonymous with startups, unicorns have gone global.
Top 5 Countries With the Most Unicorns
| Country | Number of Unicorns |
|---|---|
| United States | 702 |
| China | 302 |
| India | 119 |
| U.K. | 104 |
| France | 34 |
Source: Wikipedia, as of April 13, 2025
Age and Success Rate of Unicorns
Lately, U.S. unicorns have tended to be older when they enter the stock market. When Aileen Lee coined the term in 2013, the median age of a tech IPO company was nine years, data from University of Florida shows. Going back further in time, during the height of the dot-com bubble in 1999, the median age was four years.
Fast forward to 2023, and the median age jumped to 12.5 years.
In addition, while unicorn status may sound impressive, it doesn’t always translate to long-term success. According to a 2023 analysis by Bain Capital, less than 1% of the 2,500 unicorns they tracked worldwide generated $1 billion or more in revenues or cash — “a truer measure of sustainable success,” the report noted.
When it comes to who’s founding these unicorns, there has been some increase in diversity. Back in 2012 or 2013, when Aileen Lee did her initial IPO research, no unicorns had female founding CEOs. However, by 2024, 124 startups founded or co-founded by a woman became unicorns.
Why Are Unicorns Declining?
Owing to the range of criteria used to define and analyze unicorn companies, it can be difficult to pinpoint and track specific trends. One thing is clear, however: The rapid growth in the number of unicorn companies peaked several years ago and has declined steadily since then.
According to PitchBook, some 629 startups reached unicorn status in 2021. By 2024, though, only about 100 companies hit that mark worldwide, with 58 in the U.S.
What is contributing to the decline?
• Access to private capital. As mentioned above, companies are waiting longer before they go public, often because startups can continue to get investments from venture-capital firms (VCs) and private-equity funds in their later stages. Some prefer that option over the risky, complex process of having an IPO.
• Less capital for new ventures. One of the knock-on effects of private funds being tied up for longer is that new ventures are struggling to find capital they need.
• Late-state funding is less available. In addition, VCs are less inclined to provide funding at later stages.
Meanwhile, tech investing remains a bright spot for investors hungry for growth opportunities. Companies focused on artificial intelligence (AI) technologies were 44% of unicorns in 2024, according to CBInsights, a 7x increase over the previous decade.
How Do Unicorns Get Valued?
Many startups — even ones of unicorn size — are not profitable. Investors put in money under the assumption that profits will eventually come, and that’s why businesses may rely on longer-term forecasting. Similar to how it works when it comes to growth vs. value stocks, valuation metrics like price-to-sales ratios may be used in order to measure the company’s worth.
Investors may also come up with valuations by comparing unlisted firms with similar businesses that are publicly traded. Hence, a rising stock market may also lead to higher valuations for privately held companies, although overvaluation is an ongoing concern with many startups.
How to Invest in Unicorns
Accredited investors — those with $200,000 in annual income or $1 million in assets — can get exposure to unicorns by putting money into venture-capital funds: capital pools that invest in private companies. In recent years, they’ve attracted not just venture-capitalists, but also hedge funds, asset-management firms like mutual funds as well as sovereign wealth funds.
It’s important for would-be investors to bear in mind that it can take years for even a successful startup or unicorn to make a successful exit, either via an IPO, SPAC, direct listing, or an acquisition. On average, it takes eight years for a unicorn to exit, according to data by VisualCapitalist.
Can Average Investors Invest in Unicorns?
Unicorns don’t generally accept modest investments from individual or retail investors.
Jay Clayton, former chairman of the Securities and Exchange Commission, argued that smaller investors should get access to private-market investments. The fact that companies are staying private for longer has also made it true that individual investors are missing out more on businesses in their early stages.
But skeptics note that private markets don’t have the same disclosure requirements that public markets require, a situation that could leave retail investors in the dark about a company’s financials and increase the risk of fraud. Mutual funds can put up to 15% of assets in illiquid assets, but often they don’t allocate that much to private companies since these investments are tougher to sell.
Deep-pocketed retail investors can get in early with some startups via angel investing — when individuals provide funding to very young businesses. But these fledgling businesses tend to have valuations far below $1 billion.
💡 Quick Tip: Newbie investors may be tempted to buy into the market based on recent news headlines or other types of hype. That’s rarely a good idea. Making good choices shouldn’t stem from strong emotions, but a solid investment strategy.
Risks of Investing in Unicorns
Not all unicorns successfully transition into stock market stars. Some see their valuations dip in late private funding rounds. Some have even scrapped IPO plans at the last minute. Others disappoint after their debut in the public markets, finding that first-day pop in trading elusive or underperforming in the weeks after the IPO.
How do you know whether a unicorn is destined to be the next market darling or flame-out? There is no way to know for sure, but there are a number of risks when it comes to unicorn investing. Here are some:
• Lack of Profitability: Many unicorns offer deeply discounted services in order to supercharge growth. While venture capitals are used to subsidizing startups, public market investors may be tougher on these models.
• Market Competition: No matter how great an idea is and how much funding they bring in, there are always competitors. If another company has superior marketing, more users and higher sales, even a unicorn could stumble.
• Consumer/Business Need: Just because a founder has a cool idea and they can build it, doesn’t mean anybody will spend money on it. The true test of product relevance lies in actual market performance.
• Management Team: Who are the company’s founders, and what is the culture they are creating at their startup? Many startups fail, and a founder’s management style and lack of experience can be cited as major reasons why.
• Regulatory Changes: Some unicorns represent new business models or disrupt existing industries. Such changes may come with regulatory oversight that makes operating difficult.
Alternative to Unicorns in Startup Terminology
The surge in private-market tech investing has led to a new vernacular that’s specific to startup valuations. Here’s a table that covers some popular lingo.
List of Unicorn Terminology
| Startup Term | Definition |
|---|---|
| Pony | Company worth less than $100 million |
| Racehorse | Company that became unicorns very quickly |
| Unitortoise | Company that took a long time to become a unicorn |
| Narwhal | Canadian company with a valuation of at least $1 billion |
| Minotaur | Company that has raised $1 billion or more in funding |
| Undercorn | Company that reached a $1 billion valuation then fell below it |
| Decacorn | Company with a valuation of at least $10 billion |
| Hectocorn | Company with a valuation of at least $100 billion |
| Dragon | Company that returns an entire fund, meaning the single investment paid off as much as a diversified portfolio |
The Takeaway
While they started out as rarities, unicorns have since multiplied. For investors, unicorn companies may appear to be a good way to diversify and get access to a high-growth business. But it’s important to remember that many unicorns are unprofitable businesses that secure $1 billion valuations by making very long-term projections.
It’s important to look closely at a new company’s management team, history, as well as financials before investing in it. Whether you’re a new or seasoned investor, researching which stocks to buy and when to buy them can be time-consuming and challenging.
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FAQ
What is the biggest unicorn company?
A handful of unicorns have reached a valuation of $100 billion or more while still private, including SpaceX, ByteDance, and OpenAI.
What is the difference between a unicorn and a startup?
A unicorn is a startup, or private company that is VC funded, that reaches a $1 billion valuation before going public. Not all startups become unicorns.
Are unicorns risky?
Yes, like many startups that have yet to prove themselves in the public marketplace, unicorns come with a risk of failure. Their pre-market valuation may seem impressive, but isn’t a guarantee of success in terms of generating revenue or cash, or besting the competition.
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