The Unicorn Is Dead, Long Live the Thoroughbred

How quickly can a word’s meaning change? Well, when it comes to the business definition of “unicorn,” it appears the shelf life is something like eight years.

When venture capitalist Aileen Lee coined the term in 2013, there was a very good reason to call a privately held startup worth more than $1 billion a unicorn: There were only 39 of them. Now, the unicorn is looking downright ubiquitous, with the current count up to more than 800 and certain to grow, nearly doubling in size in just the last year. It’s predicted that 2022 will be the year when the vaunted unicorn club becomes a quadruple-digit organization, passing 1,000 members.

A creature that you would once be lucky to glimpse is now one of a hundreds-strong stampede. How did such a rare thing become so commonplace, and what can we expect from their number in the years to come?

2021: The year of the unicorn

2021 was truly the year of the unicorn. Nearly 40% of all current unicorns were created in the first eight months of 2021. This kind of growth wasn’t just seen for companies crossing the $1-billion valuation threshold either. Through the first three quarters of 2021 alone, VC investment jumped by half year-over-year, from $166 billion in 2020 to $240 billion through Sept. 30.

Of course, 2020 itself presented a lower base of investment because investor activity was diminished by jittery and uncertain fears in the pandemic’s earliest days about the kind of new paradigms the worldwide pandemic was set to unleash. While the pandemic has proven to be destructive in its human costs, it has also caused societal realignments we have to consider when pondering how people will live in future economies. We’ve already seen this in labor and social movements like work from home, learning pods and the Great Resignation. In terms of investing, the pandemic highlighted the importance of a few sectors that had already grown significantly during the 2010s, namely health and tech (and health tech).

It should be no surprise then that in 2021, fintech and internet software and services were the top producers of unicorns. It was reported that fintech accounted for 27.5% of the 316 new unicorns added to the list in the first eight months of 2021, followed by internet software and services (21.5%) and health care (8.5%).

Looking over Forbes’ anticipated “next unicorns,” almost all of these startups have at least one foot in technology, whether that is health tech, enterprise tech, fitech or martech. Regardless of what the final stages of the coronavirus may have in store for the world, these sectors are sure to thrive whether the future holds a fully “open” or even fully “closed” global economy.

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Will the unicorn become more rare?

Was 2021 a unique moment in time? Will the emergence of a virus variant like Omicron create lockdowns that take us back to the societal and economic pullback of spring 2020?


Much of the 2021 spike we saw across the economy could be, in part, attributable to an anticipatory feeling about the burst of society opening back up, and if the pandemic drags on in any significant way past a two-year window, a correction may be in the works, especially if we see the kinds of global lockdowns and attendant economic restriction (the worst since World War II) we saw during the first year of COVID-19.

If there is a constriction in the unicorn market, it wouldn’t be the first time in the term’s eight-year history. In 2016, there was a significant funding constriction across all of VC, particularly for unicorns, to the tune of 68 percent. As I noted at that time, there was discussion of unicorns “losing their horns” due to the heightened fears about inflated valuations. Of course, this discussion was also somewhat American-centric and neglected the unicorns developing and being funded at a different timescale in Asia.

The worries about western valuations did, in fact, prove to be short-lived. 2017 generated a record amount of new unicorn funding, to the tune of a 39% year-over-year increase, powered in part by the emerging ride-sharing tech revolution at the time. This presents its own lesson for anybody who might fear a unicorn pullback: Today’s valuations fears could very quickly give away to tomorrow’s next big thing.

No longer rare, but still pretty special

The arc of the financial universe bends toward growth, even if that sometimes means a zero-sum game between sectors (e.g. the “online” economy versus the “travel” or active leisure economy).  Even if there is a temporary decline in growth for 2022, strong companies, the kinds of companies approaching $1 billion in value, will adapt to these conditions, and there is no reason to think we won’t continue to see new unicorns in the hundreds across those sectors that are continuing to churn them out. In any world, the 2020s will continue to be a boom time for the aforementioned health tech, enterprise tech, fintech and martech industries.

It is also important to remember, as in the case of 2016, if there is pullback in the United States, that may not necessarily be the case in the rest of the world. As numerous as unicorns may seem, it just may require looking a little harder for them outside the usual places.

As we soon reach four figures in their total number, perhaps the goalposts will shift for the unicorn to preserve the rarity of that designation. Maybe what we think of as the “decacorn” – the 45 private companies currently valued at $10 billion or greater – will become the new unicorn.

That would be a shame though, as $1 billion is still an impressive mark by any standard, and a large cohort of these highly valued startups can give us better and more detailed insights about industry and geographic strengths for privately held companies.

Nevertheless, perhaps it would be more apt to start calling these companies something like “thoroughbred” instead of “unicorn.”

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