Unicorns, once elusive creatures of the startup universe, are again becoming a rarity. According to the latest data from Pitchbook, July saw just 3 new companies reach the $1 billion valuation necessary to join the club — a paltry count in comparison to the 67 that emerged back in December 2021.
The term “unicorn“, artfully coined by venture capitalist Aileen Lee in 2013, was originally a perfect moniker. A decade ago, a startup hitting such a milestone in private markets was a true rarity. But, the convergence of ultra-low interest rates, the spread of software into all facets of our lives, and a horde of wannabe entrepreneurs emulating the twenty-something billionaires they saw on the cover of tech magazines, sent unicorn “births” to unprecedented heights. Over 600 companies soared past the billion-dollar mark in 2021 alone — a rate of more than 2 per working day.
Back in my day…
The combination of higher interest rates and tech’s “year of efficiency” has forced startups to do more with less. Growth-at-all-costs has become growth-if-it-makes-sense, and once deeply unprofitable companies (such as Uber, Klarna and Stripe) are now touting how prudent they are, forging paths to profitability.
Deep-pocketed investors like pension funds and sovereign wealth funds are cooling on the high-risk, high-reward world of the venture capital market in favor of less risky, more long-term investments. As the funding dries up, unicorn sightings are only going to get rarer — being a charismatic character with a vision to “move fast and break things” isn’t cutting it right now.
