The next massive technology company will likely come out of the venture capital world, and right now, there are more to choose from than ever before. The number of so-called unicorns in the United States, defined as venture-backed startup companies with valuations of at least $1 billion, has soared in recent months.
In the U.S. today, there are currently 264 unicorns, virtually every one of them a technology startup. Compare that with 2013, the year the term was coined, when just 39 companies met the standard.
In the third quarter of 2021 alone, $160 billion was invested in tech startups globally, according to Crunchbase, about half of it in the U.S. Numbers like that “would have seemed outrageous a few years ago,” Kyle Stanford, a senior analyst at Pitchbook, tells Wired.
The reason is that investors are earning more on their money. “Across the market, exit value — the amount a company is worth once it goes public or gets acquired — is at an all-time high, surpassing $500 billion for the first time in a single year (with one quarter still to go),” Wired reports. “That’s already double the record from last year.”
Think of venture capital as the seed for the next big technology companies. Google, Alibaba, Facebook, Dropbox and Zoom are all household names that began life as venture-backed startups.
When Cerent, a maker of optical equipment, was acquired in 1999 by Cisco Systems for a record $6.9 billion, it made its VC backers, who invested $8 million in it, very happy indeed.
Of course, most startups fail, and the future for today’s herd of unicorns is not at all clear.