Less than 2% startups reach the coveted 'unicorn' status
What is more interesting is that till now the e-commerce or marketplace start-ups have been the most successful in entering into the unicorn club.
It has become increasingly difficult for start-ups to get into the exclusive unicorn club today. We have seen that the number of start-ups becoming unicorns trickled to just 9 or 10 in the first quarter of 2016 from 14 new unicorns in the last quarter of 2015, according to a CB Insights report.
Now just 1.28% of start-ups become unicorns, according to a Ohio University report. The year 2015 saw the maximum amount of unicorns coming into existance. In 2015 there were 47 start-ups that became unicorns in the US. In 2014 there were 34 unicorns and in 2013 there were just 5 start-ups.
A unicorn is a start-up company valued at over $1 billion.
Source: Ohio University Online
However, what is more interesting is that till now the e-commerce or marketplace start-ups have been the most successful in entering into the unicorn club. There are currently 56 start-up unicorns from the e-commerce or marketplace sector, said the report.
It is closely followed by the internet software and services start-ups with 41 unicorns.
The fintech start-ups have been seeing a surge of late. Currently, there are 25 unicorns in the fintech sector.
The hardware sector has 16 start-ups that made it to becoming unicorns. Big data start-ups are at the same number.
There are 13 unicorns from the healthcare sector and 12 unicorns from the social sector.
Till June 2016 there were 169 start-up unicorns with a cumulative value of $609 billion. Some of the top unicorns in the US include Uber at a valuation of $62.5 billion, Airbnb with $25.5 billion, Palantir Technologies, which is into big data, at $20 billion, Snapchat and Wework at $16 billion valuation and SpaceX with $12 billion.
The average time to become a unicorn too has increased from the average of 5.3 years in 2005 to an average of 6 years in 2015.
Out of the top unicorns in the US Snapchat was the fastest o get into the club as it took 2 year from its foundation. Airbnb, on the other hand, took 3 years, while Uber took 4 years. SpaceX took a long 10 years to become a unicorn.
However, it seems a tough road ahead for start-ups to become unicorns as venture capital (VC) funding is down by 11.3% in the first quarter of 2016 since the first quarter of 2015. The Ohio University report also said that 82% of start-ups report that the fund raising environment is challenging.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
02:23 PM IST